Make sure all them flats arnt in the same area, i ways believe if you buy a load in one area, and something bad happens in the area, you are more at risk. My mate had 10+ houses on a street someone got shot dead on on NyE a few years ago and struggles to get tenants now. Bit extreem but you get my point

That's why I said sensible option for BTL, IMO, it's never a sensible option for a domestic mortgage

The media interest/this thread aren't about doing it sensibly with a BTL. It's about people having houses they can't afford.

that's how I funded my second property. The first property is a townhouse split into two flats; flat one covers the mortgage and bills for the entire property, flat two is profit.

I got the LTV to a position I was happy with and then the next lot of savings funded buying the next property which is exactly the same guise, a three storey townhouse split into two flats.

Once the LTV is good on this one, I'll buy another and so on and so forth

Interest only is fantastic for BTL property where the market is stable.

At the end of the term you just remortgage and continue to derive an income.

Maximum return on investment. The more you lock away in capital the less BTL properties you can own.

missing the obvious

No tennants = no income

Income covers mortgage, no income means the mortgage effectively comes out of my pocket. Interest only over a longer term means that if/when I have to cover any payments, I only have to cover the bare minimum.

However, my mortgages allow me to overpay by upto 10% of the capital per annum. When the flats are leased, I more than make the 10% repayment.

Interest only hugely minimises risks on a BTL

Why is it the sensible option? Surely it depends on the circumstances, but with a repayment BTL you get the rental income and a property at the end of it, but with interest only you only get the rental income.

Am I missing something obvious?

Interest only on a BTL is the only sensible option so technically, its not a mug's game ;)

Both of my BTL mortgages are Interest only but my personal mortgage is a repayment

Interest only mortgages are a mugs game. They are almost impossible to get unless you have a rock solid way to pay at the end of the term. Even if you say you will sell your house, they won't accept that.

quote:

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Originally posted by mwg
Can't see the point of paying interest only but then I don't have a clue when it comes to mortgages

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I thought Interest mortgages had been removed about 2 years ago

i know the news was referring to people who had taken them out years ago

I know someone who has a 350k interest only mortgage - so the only likely ending is they will sell it when thet erm is up and hope the house is worth more than the 350k

Seems pointless

[Edited on 03-05-2013 by whitter45]

I can see why people might have chosen an interest only mortgage. Its the sort of product in which you get a double benefit - cheaper payments in the short term and the chance to forget about the problem of repaying.

I'll be annoyed if the government bail these types of loans out though.

I have never ever seen the appeal of an interest only mortgage, you might as well rent somewhere and not have the hassle of sorting all the problems that come with home ownership

quote:

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Originally posted by John
Not sure if trolling or not?

Radio had loads of people on this morning who were paying interest only, knew they wouldn't be able to pay at the end, but were 'trying not to think about it'.

That's exactly the reason they are there in the first place and deserve all they get.

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quote:

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Originally posted by Ben G

quote:

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Originally posted by mwg
Can't see the point of paying interest only but then I don't have a clue when it comes to mortgages

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i suspect it was a good idea back when houses cost 10p and are now worth hundreds of thousands.people who bought at the height of the boom on interest only will be buggered for a good while now.

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quote:

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Originally posted by 3CorsaMeal

quote:

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Originally posted by John
Not sure if trolling or not?

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probably a little, but its a situation i'm going to be in soon and do wonder what other people are thinking about it.

Do people pay the interest only and at the same time save some money each month for the end of mortgage?

as it seems the monthly payments can be feck all sometimes, my mate boasts about his costing hardly anything due to interest rates

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quote:

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Originally posted by mwg
Can't see the point of paying interest only but then I don't have a clue when it comes to mortgages

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quote:

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Originally posted by John
Not sure if trolling or not?

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It very very clear with all interest only mortgages that you will still owe the cost of the house at the end so I am not sure how anyone can claim they are mis-sold (unless by an advisor etc)

Many people bought them on the whole market rising - i can see why. My parents bought their house for 14K, when the mortgage ran out it was worth £300+ and they could have taken a loan out to cover the amount left. I'm not sure the same could be said for those who took out a mortgage in the last few years.

IMO there is a place for them. They get you on the ladder. I did it and it worked well. As I earn't more I then switched over to an repayment one.

Can't see the point of paying interest only but then I don't have a clue when it comes to mortgages

Not sure if trolling or not?

Radio had loads of people on this morning who were paying interest only, knew they wouldn't be able to pay at the end, but were 'trying not to think about it'.

That's exactly the reason they are there in the first place and deserve all they get.

How can the company sell the wrong mortgage? If you don't understand what interest only means you shouldn't be allowed to have a house in the first place, which comes back to deserve all they get.

Endowments are slightly different but everyone has known they'll have a shortfall for years now, which again revolves around to their own fault.

Anyone experienced this?

You need a proper repayment plan of action for when you reach end of the mortgage, seems lots of people are reaching retirement and not having the money to pay back so are being forced to sell their home.
Mortgage companies are blaming the people for buying the wrong mortgage, not the company selling the wrong mortgage.

Is this more scaremongering?

Would i best getting the other sort of mortgage?