Interest only or repayment on BTL properties?

thebounca

I have 2 Buy To Let properties which are both on repayment mortgages for another 20 years. I don’t plan on ever selling them but using the monthly rent as part of my retirement plan. 

My plan was to pay these mortgages off and therefore enjoy the full profit of the rental income in retirement.
Is this a good idea or should I put them on Interest Only mortgages and save the money now? 

Are there tax issues with paying them off down the line?

dander

Personal opinion only but I prefer repayment because you are paying interest on an ever-reducing balance. Interest only and you are paying the full X% on the entire mortgage cost for the full 25 years (or whatever your term is). Go interest only now and you'll be super-exposed to interest rate changes for the whole mortgage term as well as paying more interest overall.

silvercar

The mortgage interest is an allowable expense, even though restricted to basic rate, so there may be some advantages in keeping it. It depends what else you would do with the money.

thebounca

I would simply save the money in an ISA. Over 20 years would it best to save the money or keep paying off the debt? 

There is no mortgage relief anymore so I have some people saying don’t ever bother paying off BTL properties. It’s still not 100% clear to me what to do. 

thebounca

silvercar said:

The mortgage interest is an allowable expense, even though restricted to basic rate, so there may be some advantages in keeping it. It depends what else you would do with the money.

would simply save the money in an ISA. Over 20 years would it best to save the money or keep paying off the debt? 

There is no mortgage relief anymore so I have some people saying don’t ever bother paying off BTL properties. It’s still not 100% clear to me what to do.