Best buy to let interest only mortgage deals

What is a buy to let interest only mortgage?

A buy to let interest only mortgage is designed for landlords. You only pay the interest on the loan each month, rather than paying off any of the original amount you borrowed (known as the capital).

This means your monthly payments will be much lower than with a repayment mortgage - but the loan itself still needs to be paid off in full at the end of the term.

Many landlords sell the property to repay the mortgage, or use savings or another investment plan.

Why choose an interest only mortgage for buy to let?

Landlords often choose interest only for a few key reasons:

• Monthly payments are lower, which helps maximise rental profit
• More cash available to cover maintenance or gaps in rental income
• Flexibility to repay the mortgage in a way that suits your investment strategy

How buy to let interest only mortgages work

Your monthly payments cover the interest only. So if you borrow £200,000 at 5% interest, you’d pay £833 per month.

The full £200,000 still needs to be repaid at the end of the mortgage term which is generally 20–25 years.

Lenders will want to know how you plan to repay the capital. Some landlords build up savings or plan to sell the property to clear the debt.

Who can get a buy to let interest only mortgage?

To qualify for a buy to let interest only mortgage, lenders usually expect you to:

• Already own your own home
• Have a good credit history
• Be earning above a certain income (often £25,000+)
• Be buying the property specifically to rent it out
• The rent you expect to earn needs to comfortably cover the mortgage payment - usually by 125% to 145%, depending on the lender and your tax status.

Some lenders also have age limits, especially if you’re nearing retirement.

What are the risks?

While lower monthly payments are appealing, interest only mortgages do come with some risks:

• You’re not reducing your loan balance, so you must have a clear plan to repay it
• If house prices fall, selling the property might not cover the full mortgage
• And of course if your rental income drops or you have long void periods, you’ll still need to cover the interest payments just like on any other mortgage.

It’s important to understand your responsibilities as a landlord and be confident your investment plan will work over the long term.

How to find the best buy to let mortgage deals

You can use our online Mortgage Finder to check the best buy to let interest only mortgage rates from across the market.

We work with over 90 lenders, including specialist buy to let providers, and our expert advisers can help find the right deal for your situation.

Some lenders offer fixed rate deals (where your payments stay the same for a few years) or tracker options (which follow the Bank of England base rate). We’ll help you compare them.

Making repayments on a buy to let interest only mortgage

Because you’re only paying the interest, your payments will be much lower than with a repayment mortgage.

But remember - you’re not chipping away at the mortgage balance. At the end of the term, you’ll need to repay the full amount.

If you want more flexibility, some lenders offer part interest-only, part repayment deals. This lets you reduce the final lump sum while still keeping payments relatively low.