Repayment mortgage versus interest only - which is better?

Most property investors in the UK prefer an interest only mortgage because it gives you certain long-term advantages. Let us look at how repayment mortgages work too, versus interest only mortgages, and how you can even make advanced repayments without being penalises.
On repayment mortgages, banks count on a game that makes it all more profitable for them, but less so for you, as a burrower and investor. Watch the video all the way to the end to learn how to beat the banks at their own game!
If you’re interested in Buy to Let mortgages, I have a more detailed video that you can watch at the link below:
• Buy property through a...
Timestamps
00:00 - Intro
00:34 - There are two ways to repay a loan you take to purchase a property - a repayment mortgage, and an interest only mortgage
01:36 - What is the difference between good debt and bad debt?
02:34 - What are the advantages and disadvantages of each type of mortgage?
05:40 - Let me give you an example for each type of mortgage
09:34 - This is the biggest secret that the banks don’t tell you!
#InterestOnlyMortgageUK #RepaymentMortgagevsInterestOnly
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If you have a question you want me to answer then please put it in the comments section. If you enjoyed this video please do subscribe so that you are notified of more videos just like this.
Get Mentored By Saj:
If you want to achieve your property goals with the support of an experienced property mentor then my Inner Circle Mentoring programme is just what you need. Find out more here: www.sajhussain.com/let-me-men...
Thank you for watching my name is Saj Hussain AKA The Property Joint Venture Expert and Your Partner for Wealth Creation Through Property.

[@ArturasKozulas]

i like this guy..nice clear and no bullshit.really better then other similar type content. thanks Saj

[@TheSajHussain]

Thank you. No need to fluff things up, I prefer to get straight to the point.

[@user-gz6tx6yp3v]

The fact you mentioned inflation you got my interest. I am a big believer that inflation is a good thing which is contrarian, but what people don't realise is that inflation effectively also pays off the mortgage. Over 30 years with inflation at 3%, your debt is reduced by 90% in real terms. Imagine inflation at 5-6% which is where I would prefer it to be. Of course banks love to advise our government that inflation is bad, because it suits them to have us deeper in debt for longer.

[@TheSajHussain]

Spot on 👌

[@sofii515]

Brother i appreciate your effort. I watched so many videos related to repayments mortgage and Interest mortgage but nobody told the secret in the clear manner . Again many thanks .

[@TheSajHussain]

Thanks Aamir. If you are enjoying these videos, then please do share them with your friends.

[@jbrooks959]

😱 so glad I’ve just watched this video. The banks gonna hate you 😂

[@TheSajHussain]

Lol, thanks. If you are enjoying these videos, then please do share them with your friends.

[@sandeepjuneja5716]

Again a big thank you, this content is absolute GOLD! I would never have known or thought off this. Despite having several mortgages, feel quite foolish now. But lesson learned. Thank you.

[@TheSajHussain]

I'm glad that you are learning something new off these videos, if you are enjoying these videos, then please do share them with your friends.

[@minb3850]

Very informative video with crisp and straightforward delivery, no bullshit. Very impressed overall!

[@TheSajHussain]

If you are enjoying these videos, then please do share them with your friends.

[@bensmith5791]

Fantastic video. Only place where this was explained clearly and with figures and graphs and lots of pro tips. Trying to find a vid on this for some time that made sense. New subscriber here. 👍🏽

[@TheSajHussain]

Awesome, thank you!

[@mogheesmir]

Thanks for another great video Saj!

[@TheSajHussain]

My pleasure Moghees.

[@Afghanpovertyaid]

Thank for creating these great videos!

[@TheSajHussain]

My pleasure!

[@momentuminvestpod]

great content Saj! learn something new everyday

[@TheSajHussain]

Glad it was useful Will.

[@ddevil892]

Another awesome video. Tanks again. Another lot of useful information. Sub well invested.

[@TheSajHussain]

Thanks alot Damian, if you are enjoying these videos, then please do share them with your friends.

[@omarmasum51]

Just seen your jargon free video and learnt a lot, keep it up 👍

[@TheSajHussain]

Thank you Omar, if you are enjoying these videos, then please do share them with your friends.

[@abdulhalim-sq7lm]

Thanks Saj, once again a great video. I’m a home owner for last 22 years and today I understood from your video about the monthly overpayment and how it can reduce the overall payment.

[@TheSajHussain]

I'm glad this was helpful Abdul. If you are enjoying these videos, then please do share them with your friends.

[@prabhupatra]

Wow ! thanks for that little secret Saj .... your videos definitely will change one from emotional to logical purchase. Love your videos.

[@TheSajHussain]

Glad it was helpful.

[@Faizal_Khan]

So glad KZbin has recommended this video. Thank you for sharing this valuable information😊👍🏻

[@TheSajHussain]

Salaam Faizal, thanks for the support. If you are enjoying these videos, then please do share them with your friends.

[@Faizal_Khan]

@@TheSajHussain W/Salaam, will do 🙂

[@FlavioMartinez97]

Super informative, thanks!!!!

[@TheSajHussain]

Glad it was helpful!

[@faisal_amin]

Great video. Thank you Saj.

[@TheSajHussain]

Glad you liked it Faisal.

[@The_Unintelligent_Speculator]

Power of the property cycle and inflation can mean the difference in terms of wealth. Really enjoying this channel.

[@TheSajHussain]

Thank you

[@narn2005]

Brilliantly put Saj

[@TheSajHussain]

Thank you Nanik, If you haven’t already, then do subscribe to the channel and enable the notification bell so you don’t miss any of the videos as they are released.

[@joseynovember6503]

Thanks 🙂

[@TheSajHussain]

You are most welcome

[@wendybicknell694]

Naughty banks, thanks Saj great information

[@TheSajHussain]

You bet

[@sreckobutorac7777]

Great tip about paying off interest only mortgage with 10% over to pay off principal. This way you can pay off entire principal in just 10 years. Not only you pay off entire loan faster, but it cost you less. Now I know exactly what to ask mortgage broker. Saj, this tip comes at the right moment. I just spent most of my cash on property investments (all cash buys to reduce risk while entering new market and asset class). I will finance next property using this tip. Many thanks.

[@TheSajHussain]

Thank you Srećko!

[@jacquelinepaul9731]

With respect how can adding a mere 10% additional, get you the property 15 years sooner and for less money ??..please explain like I'm 5.

[@prestonmcgurk4772]

Great advice saj👍❤️

[@TheSajHussain]

Thanks Preston.

[@officialspock]

Oh my god, the inflation angle is a light bulb moment for me, never thought about it that way, you can use inflation to work for you, coz of this I subbed to you

[@TheSajHussain]

😍

[@officialspock]

@@TheSajHussain the only problem though is no bank or lender will allow interest only for 10-15 yrs even though you keep on refinancing

[@akumar7366]

Thanks this is gold dust.

[@TheSajHussain]

Appreciate the support, if you haven’t already, then do subscribe to the channel and enable the notification bell so you don’t miss any of the videos as they are released.

[@dani4772]

Very good content. I have always used cash but it isn't always possible on high value purchases.

[@TheSajHussain]

Very true!

[@JayG2K]

Another thing I only came aware of is what's called Product Transfer. Where you can go to existing mortgage provide with same term (years). i.e. you are now in a the banks high SVR and then go for a better product with lower interest, it saves all the hassle of legal work. May end up doing this if I don't get accepted for the re-mortgage.

[@TheSajHussain]

Yes, absolutely.

[@jenoirine]

Couod you explain this a bit more. Thanks

[@Sam_udoh]

Hi Saj, Iwas wondering if you know any brokers that specialise in bridge loans for auction properties I really appreciate the content and educational material you’ve put out 🙏🏾

[@MEXI-up7dl]

Hi Saj, great videos, I am looking to buy and rent properties can you point me to the right mortgage advisor? Much appreciated

[@Nash33ds]

That is really quite revealing, I did not know about the front loading of interest! I never really understood why people would opt for interest only for residential properties. Thanks very much for this nugget of information :-)

[@TheSajHussain]

Thank you Anon, if you haven’t already, then do subscribe to the channel and enable the notification bell so you don’t miss any of the videos as they are released

[@dansome3563]

I was wondering the same if u get a interest only and still be eligible to pay 10/100 yearly awesome like u said u in more control thanks again

[@TheSajHussain]

Glad to help you out Dan, if you are enjoying these videos, then please do share them with your friends.

[@LP-qx6df]

i am so thankful to have found your channel and this extremely valuable knowledge you share Saj! You are very professional and clearly very skilled at what you do! i love your content just like many others i am benefiting and taking away important information from your videos. I can't help but to feel lucky already!! if the opportunity to have a conversation arose, i would love to ask you a few questions. Kind regards, Luis Prew

[@TheSajHussain]

Hi Luis, I'm starting the live streams again soon. We can chat there.

[@LP-qx6df]

@@TheSajHussain great thank you!

[@JayG2K]

My dads got one BTL and the interest is now 1.85% its was a tracker mortgage he got nearly 15 years ago. I'm in the process of re-mortgaging one property, which I should of got round to doing when it went to the 4.44% SVR!. Just waiting for the offer to come from. My goal is to pay the principal loan off as soon as possible, as I don't like paying interest. I asked the broker whether it was better to get a repayment or interest only mortgage. i.e just make overpayments upto 10%of the loan balance per year vs repayment. I have set up standing orders every month or so with my bank. Really been a bit bad balancing this so set up separate accounts for each property. So I can keep on track.

[@TheSajHussain]

Sounds good Jay

[@ManiSingh-hn7ff]

Hi Saj incredible, education certainly makes you rich when applied. This knowledge is superb thank you. This can be applied to your own home you live in, what got me was the banks charge alot more interest right at the start, makes sense to switch the mortgage to interest only and let inflation do its magic alongside using the 10% overpayment benefit. Question is how do you work out the sweet spot of when to switch back to repayment mortgage? And begs the question age dependant, does it even make sense to pay off your mortgage early? Well for me if you're young keep leveraging the mortgages on interest only, use the inflation to your advantage and let the house prices do their magic and that's where the money is to eventually have at least one house paid off if you're investing in property. Any thoughts are welcome :)

[@TheSajHussain]

Hi Mani, sitting down with a really good mortgage broker will help you work out what is right for you.

[@ManiSingh-hn7ff]

@@TheSajHussain thank you could you recommend one please? I'm setting out on my BRRR BTL Startegy journey so will be helpful to speak to a broker about how best to utilise my own mortgage to help facilitate.

[@mhoward181]

Hi. Great video. So what you are saying is. If you want to pay off some of ur BLT mortgages. Make sure there interest only. Then pay whatever u want as an overpayment. Is that what you mean?

[@TheSajHussain]

Yes, that's it.

[@komalaulakh5300]

Hello Saj, Came across your channel a few days ago. you really come across with some great wisdom compared to 95% people on youtube that advise on property investing etc. Could you please put me in touch with your broker as I am looking to gain some advice about future options. Thanks

[@TheSajHussain]

Komal message me on FB or Insta and I'll connect you.

[@mak4611]

Thanks for the video - so... the big question is interest only with overpayments or capital and repayments with overpayments? The monthly should be the same

[@TheSajHussain]

It's really about being aware so you can have a fully conversation with your mortgage broker.

[@alanharman5128]

hi Saj, great video. One thing I am struggling to understand with the repayment mortgages - using the example in your video of borrowing 100k at a rate of 4%, I get that for the first year the interest each month will be £333 but what I'm trying to work out is how the overall monthly repayment figure of £527 is calculated. How is the percentage ratio of Interest versus capital repayment each year worked out?

[@TheSajHussain]

Alan you need to use an amortization table to calculate this.

[@alanharman5128]

@@TheSajHussain thanks Saj

[@km99999]

How do you view poperty brought with cash outright.?

[@TheSajHussain]

Watch this video on property without interest kzbin.info/www/bejne/b2i1fop-Z8abaZY

[@alphamega3822]

Hi, If I remortgage my house and bought few buy to let interest only mortgage, is it a good idea to payoff my house using cash flow from rental properties?

[@TheSajHussain]

That is a strategy some people use. It really depends on your longer term objectives.

[@ianh9871]

Off at a bit of a tangent, but I dont think it matters, what matters is the profit stays in the business either as cash, equity, or repayment of debt, at the end of the day which ever you choose its reflected in the balance sheet for the business.

[@TheSajHussain]

👍

[@navdasone4710]

Very informative video. However loud background music interferes and distracts. making focusing on what is being said difficult. The music appears to be in a race against the speaker.

[@TheSajHussain]

Thank you for the feedback

[@freedomforever4082]

Am in a process of this borrow 100k for a hmo buy to let 4%seem abit deep any advise and maybe you know some good broker

[@TheSajHussain]

Commercial mortgages are usually more expensive than BTL's. To access my contacts, use this link www.sajhussain.com/access-sajs-contacts/ We will then look at your needs and connect you with the person we think can best help you with your situation.

[@christopherhubbard602]

I use to over pay on my old mortgage but at the moment I don't I am on repayment mortgage

[@TheSajHussain]

👍

[@pavelhristov562]

But you didn't say about how the interest rate gone up over the time

[@sage6336]

Saj is over paying your repayment mortgage a good thing? Yes you pay less interest over time , but at the end you have a property with no debt but the equity doesnt help you or give you an income. If you had £100 spare to over pay each month would it be better to invest that money to help you in your retirement . £100/month over 25 years would be £30,000 at even 2% compounded interest that would give north of £38,000

[@TheSajHussain]

It all depends on the outcome you are trying to achieve. So, it won't be the same for everyone.

[@user-zw7dk5lk3v]

Hi Saj, would you happen to have an islamic mortgage broker by any chance? Great video btw!

[@TheSajHussain]

Yes, To access my contacts, use this link www.sajhussain.com/access-sajs-contacts/

[@afrasiabhussain250]

Saj hussain is there any chance if i can call you pls for advise

[@TheSajHussain]

Thank you for your message. You can connect with me on Facebook and Instagram @TheSajHussain or use this link here: www.sajhussain.com/contact-us/

[@joline2730]

Oh ok you are right 0.10 % 🙃

[@TheSajHussain]

Thanks

[@roym2622]

Hi..thanks for good videos all the time...i want to ask you about islamic mortgage..if u can help me out it will be great..i live in London and wants to buy my first property soon..but i m interested in islamic mortgage..getting 50/50 reviews so very scared..as u know London property are so expensive...hope u will help..stay safe.

[@TheSajHussain]

Thank you for your message. You can connect with me on Facebook and Instagram @TheSajHussain or use this link here: www.sajhussain.com/contact-us/

[@maxnavsa4470]

Love see minus mortgage rate.

[@TheSajHussain]

Yes this would be interesting.

[@ep1929]

You pay more at the begining because that's when the debt is highest, start banging in £1000 overpayments and the interest element will start dropping because the capital debt is lower, it's not a bank trick it's simple figures.

[@Nash33ds]

true, it's not a trick but it is good to know !

[@TheSajHussain]

👍

[@joline2730]

Wrong - the bank rate is not 0.1 percent it is 0.01 percent.

[@TheSajHussain]

It currently 0.1 and looks like it's heading to negative rates.

[@jeztickles4361]

Can you get me a mortgage?

[@TheSajHussain]

A good mortgage broker can help you with this.

[@jeztickles4361]

@@TheSajHussain do you know one who you’d recommend?

[@electrictouch3730]

Neither are good Saj. As you know its a huge sin

[@TheSajHussain]

Agreed

[@Nash33ds]

True, its a great sin however if you can get out of quicker that is better.

[@electrictouch3730]

@@Nash33ds better not to go in at all

[@chauffeursvip6110]

@@TheSajHussain Respect, takes real man to admit sin rather than covering it up or justifying it

[@abd5414]

Pro tip: Don't get a mortgage. It'll save you from riba,hell and foreclosure :)

[@TheSajHussain]

👍🏼