What is an interest-only Buy to Let mortgage?
With an interest-only Buy to Let mortgage, your monthly payment covers only the interest charged on the loan. The original loan amount (the capital) does not reduce unless you make additional payments.
At the end of the mortgage term, the full loan balance remains outstanding and must be repaid through sale, refinancing, or other capital.
What is a repayment Buy to Let mortgage?
A repayment Buy to Let mortgage combines interest and capital in each monthly payment.
Over time, the loan balance gradually reduces, and if all payments are made as scheduled, the mortgage will be fully repaid by the end of the term.
Why many landlords prefer interest-only
For Buy to Let investors, property is a business — and cash flow is critical.
Interest-only mortgages keep monthly payments lower, which can provide valuable flexibility when managing rental properties.
- Lower monthly mortgage payments
- Greater protection during rental voids
- More cash available for repairs and maintenance
- Easier to manage unexpected costs
During periods without a tenant, or when major repairs are required, lower mandatory payments can reduce financial pressure significantly.
Using overpayments strategically
Choosing interest-only does not mean ignoring the capital balance.
Many landlords use interest-only mortgages alongside voluntary overpayments, reducing the loan balance when surplus funds are available.
- Overpay after strong rental periods
- Reduce balance following refinancing or rent increases
- Pause overpayments during quieter periods
This approach allows landlords to control when capital is repaid, rather than committing to higher fixed monthly payments.
Flexibility vs certainty
Repayment mortgages offer certainty — you know the debt is reducing each month.
Interest-only mortgages offer flexibility — you decide when and how capital is repaid.
Interest-only
Lower monthly payments and greater cash flow flexibility, but requires discipline and long-term planning to clear the balance.
Repayment
Higher monthly payments, but guaranteed capital reduction and no reliance on future refinancing or sale.
When repayment may make sense
A repayment Buy to Let mortgage may suit landlords who:
- Prioritise debt reduction over monthly cash flow
- Have strong, stable rental income
- Plan to hold property long-term without refinancing
- Prefer predictable, fixed outcomes
Risks to consider with interest-only
Interest-only mortgages are not risk-free.
- The capital balance does not reduce automatically
- Future refinancing may depend on property value and lending criteria
- Discipline is required to ensure long-term repayment
Understanding your exit strategy is essential before choosing interest-only.
Choosing the right structure for your portfolio
There is no universal “best” option.
Some landlords use a combination of interest-only and repayment mortgages across their portfolio, balancing risk, cash flow, and long-term goals.
The right choice depends on rental income, financial buffers, future plans, and personal appetite for risk.
Why tailored advice matters
Buy to Let mortgage structures should support your investment strategy — not restrict it.
Speaking to a broker who understands landlord cash flow, lender criteria, and portfolio planning can help you choose a structure that works both now and in the long term.
If you’re unsure whether interest-only or repayment is right for your Buy to Let investment, a short conversation can provide clarity.
We help landlords assess cash flow, risk, and future plans before recommending the most appropriate mortgage structure — without obligation.