Switching from Repayment to Interest Only for Buy-to-let Property

dottij

My husband has a buy-to-let mortgage which is now outside it's fixed rate period. He contacted his mortgage provider to advise them that he would like to switch from repayment to interest only. He was advised under new FSA regulations that the switch could only occur if he also took out an ISA or an endowment policy alongside the mortgage for the remaining term to ensure that the capital would definitely be repaid at the end of the mortgage term. Is this typical in this new financial climate?

In my situation my mortgage provider was able to carry out the switch immediately. Is this a good or bad thing?

Thrugelmir

Simply put yes. Leveraged BTL worked well in the boom credit years. Now normality has returned, banking on capital appreciation alone to make a profit isn't sufficent. Net rental income after all interest costs and expenses, and of course tax. Needs to be showing a profit not a loss.

Too many have treated BTL as an investment not a business.