Thursday 14 September 2023
Are you wondering whether to opt for an interest-only mortgage on your investment property?
Choosing a repayment mortgage may appear to be the clear choice as it reduces debt. However, there are advantages to going with interest-only mortgages.
Over the long term, house prices will likely go up, eroding the mortgage debt making it more beneficial for landlords to opt for an interest-only mortgage instead.
This then allows investors to still have access to their money and can use it to invest elsewhere and increase their portfolio - something that cannot be done if all those funds are tied up in repaying existing debts from other properties.
If landlords opt for an interest-only option and hold onto their property long enough, they likely won't need to make any mortgage repayments. In the UK, house prices have increased by 73% over the last decade, meaning when it comes time to sell, the profits will pay off your existing loan!
10-Year UK House Price Growth: