Buy to let - have you any information

[Tortington]

now pretend.... ....that i am a bit thick. having spoken to a broker with a tentative enquiry, that the broker says

"yoy only pay intrest only on buy to lets blah blah i dont understand you blah blah"

how the shit whoul i ever own the house long term if i only pay interest only?

He is talking rubbish. Both our buy-to-lets are repayment mortgages. He may be confused because it is only the interest on the mortgage which is tax deductable but I would try to find someone who knows what he is talking about.

Lots of people (the vast majority of small-scale, amateur property investors) have chosen interest-only on btl properties, thinking they would just refinance or sell when the mortgage term ends. Doesn't make it a good idea, necessarily.

I have 2 btl properties (both places I used to live in and kept when I had to move on). One interest-only, the other repayment. Will move the i-o to repayment when I can afford to.

maybe tis i that is confused!

intrest tax deductable - what what what je ne comprend pas!

thanks btw

The bit about the interest being tax deductible means that when you calculate your income from btl for the purposes of paying tax, you take off the mortgage interest. So you only have to pay tax on the remainder (after you have deducted other allowable expenses of course). So let's say your rental property brings in 12k per year and your mortgage interest is 7k, you pay tax on the remaining 5k.

Some people see this as meaning that there is no real advantage to repaying a btl - when the mortgage term ends you just remortgage onto another interest-only loan, and carry on getting the interest tax-deducted. so they think they are never shelling out real money. this attitude may of course be coming up for some harsh testing in the real world.

thankyou!

Very iffy to invest in buy to let when property is currently a falling asset and the government are likely to start penalising landlords bt raxing on income once they get the election out of the way.

I'd wait until you think the housing market has bottomed out - you may then even pick up a bargain, providing you're looking long term. Search auctions and look out for reposessions as well as the more conventional routes. Bear in mind that lenders are not able to be quite as generous as recently, and that you would need to at least to cover the mortgage plus an additional percentage to be viable. Do a business plan and get business support (free) if you can.