Interest Only or Repayment Mortgages [Buy-To-Let]

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[@JustinWilkins]

Hey folks! There are a couple of audio blips in this video (apologies from me and the team). But I felt like the video was important to share, and I hope you like my breakdown of mortgages.

[@ryanmcdill8163]

Love your videos, informative and easy to understand 🙌

[@JustinWilkins]

Cheers Ryan, great to hear 🤝

[@samscottbills]

Currently making this decision at the moment! Thanks for this 👍🏼

[@JustinWilkins]

Great! Glad it was useful

[@HorrorLadSteveo]

Great vid and similar to what I want to do but first escape rooms 😂

[@JustinWilkins]

😂👏👏

[@ShaneNiblockOfficial]

Really informative video!

[@JustinWilkins]

Thanks Shane 🙌

[@tmax259]

Good video Justin, we all definitely need to plan and think of the end game! Just one important part, in your example you are not taking into account the real trem value of the 100k in 20 years. Is not going to be anywhere near the monetary value that it is today, so infact it is worth less, a lot less. The power of inflation and interest only mortgages 😊

[@JustinWilkins]

Very true!

[@cristianosa7913]

Hi, can I get a buy to let interest only mortgage as a limited company without owning a house? If "yes" what are the criterias? Thank you.

[@jamesspearing121]

That’s called a loan! A mortgage is provided with a charge against the property - that’s where the banks security comes from in the loan.

[@TheOllie1700]

@cristianosa7913 Yes absolutely. We're not home owners and just secured our first BTL through LTD company. As for criteria I can't offer a huge amount of advice, but I can tell you that our mortgage broker was much more focused on how much rental income the BTL would achieve rather than whether we have our own assets. Of course, steady stable income as an individual is a requirement, but I don't think it needs to be high. Didn't need to have our own home as collateral!

[@cristianosa7913]

@@TheOllie1700 Thank you Sir

[@Poofaceturtlehead]

You can but I would not recommend it, you will be paying more.

[@jonathanholmes9069]

If your plan is to pay some properties off and then live off the income wouldn’t it be best to have some properties in your personal name?

[@JustinWilkins]

It could be, but they would be incredibly tax inefficient for the next 10-20 years whilst I own and run a business due to section 24. It would only become more tax inefficient after that time, and even then it’s not beneficial enough.

[@carlbjorling6058]

I had no idea that repayment method worked like that. I thought you had to pay a fix amount every month during the set period to repay your mortgage plus the interest rate on top of that which obviously reduce over time as debt decreases. I didn't know the monthly payment excluding the payment on interest was variable, adjusting with the monthly interest payment, making a fix total amout to pay per month. What I thought is for example on year 1 you have to pay a monthly amount of £500 plus interest of £300, and by year 10 you still pay £500 but now on interest you only have to pay £200. On your example you end up paying the same amount every month during the whole period. Not sure if I understood it properly or not. Is this repayment method applicable also to resitential mortgage?

[@Havealovelyday644]

All residential mortgages use this method of amortisation (it’s called French amortisation) - when the loan is taken it is calculated so that the total payment over the life of the loan is fixed but the % of capital and interest varies every month.

[@owencook2332]

If the value of the property is currently £100,000, and in 10 years time the property is revalued at £200,000, can this then be used to repay the interest only mortgage?

[@yoyo895]

No, you'd need to sell to do that. However if you owned two properties, you could refinance to repay the other (or sell).

[@DouglasBurkinshaw]

thig with inflation is it compounds so over 30 years the mortgage should inflate down like 75% at least

[@JustinWilkins]

👏👏

[@2024-s2n]

Inflate the debt away just like the government.

[@JustinWilkins]

Haha, they sure do

[@jamesc6227]

I thought all buy to let mortgages were interest only

[@coolmonkey619]

But when you have no mortgage you cant use leverage

[@JustinWilkins]

Correct. That’s why I made this video to explain why and which types of mortgage you can grt

[@coolmonkey619]

@JustinWilkins no leverage not worth it is what I'm being told tho

[@XDontConformX]

So basically, your entire plan is dependant on house prices rising?

[@JustinWilkins]

Did I say that? No, I mentioned overpayments, repayment mortgages and selling property lol.

[@XDontConformX]

@@JustinWilkins Firstly, I'm surprised with the sass because you come across a super nice guy.. Secondly, if property prices fall and the entire portfolio falls into significant negative equity how would these techniques work?

[@soyboypersonalfinance1138]

@@XDontConformX let me guess, your one of those salty procrastinators who have been saying property is too risky and is over due a huge crash for the past decade?

[@Havealovelyday644]

@@XDontConformX buy to let mortgages require 25% equity (75% loan to value) so there is already a buffer in there. Then Justin explained he’s planning to move into repayment mortgages after a number of years. This will reduce leverage and provide additional safety.

[@Andy5c]

​@XDontConformX yawn..... you know the population is due to increase by 5million by 2030 right? What do you honestly think is going to happen to house prices!!! Inflation at 3-4% alone over next 10years is a 30-40% increase in house prices alone. With no other external pressures