Fixed mortgages

2020confused

Hi

Needing some advice please. 

Ive been advised to take out a capital and interest repayment mortgage on a Buy to let. I do like the idea of paying off the capital but not confident I can afford it. I also have an option to take out an interest only Buy to let mortgage fixed for 5 years. My question is that if I did interest only which has a fixed monthly amount can I overpay on a monthly or yearly basis? If so, as it would reduce the capital borrowed, would the monthly amount (interest), go down too? Or is it the case that on a fixed interest only, buy to let mortgage the monthly amount of interest stays fixed for the duration of the fix?

dimbo61

Well most BTL mortgages are Interest only so who is giving you advice to have a repayment mortgage ?
We have recently had an Interest only mortgage which was fixed for 5 years but we could not overpay with that lender. 
We now have an IO mortgage which allows upto 10% overpayments each year.
So it's up to you to check carefully or Tell your broker what YOU want.
Try not to commit yourself to a repayment mortgage on a BTL in case the tenants stop paying 

2020confused

Thank you for your advice. If I did overpay the mortgage on months that I could, would my monthly interest only payments go down?

Thrugelmir

2020confused said:

Thank you for your advice. If I did overpay the mortgage on months that I could, would my monthly interest only payments go down?

Your interest charges would reduce. However your taxable income would increase. 

dimbo61

As my lovely accountant once said to me " Don't let the Tax tail wag the dog "
You only pay tax on profit so the more profit you make the more tax you pay.
The best place to be is mortgage free and earning a fair rent for your BTL property with Happy tenants