A Buy-to-Let property is purchased with the intention of renting it out for profit. Many investors use mortgage finance to acquire these properties. The two most common mortgage types are interest-only mortgages and capital repayment mortgages.

With a capital repayment mortgage, your monthly payments cover both interest and a portion of the loan itself. At the start, most of your payment goes towards interest, but over time more is directed to repaying the loan balance. By the end of the mortgage term, the full loan is cleared.

Example: Borrowing £250,000 over 25 years at an interest rate of 3.5% would mean monthly repayments of £1,251.56. Across the term, you would repay the £250,000 loan plus £125,467 in interest.

An interest-only mortgage requires you to pay only the interest each month. The loan amount (capital) must be repaid in full at the end of the mortgage term, usually through property sale or savings.

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Many landlords prefer this option as it offers lower monthly payments and frees up cash for other investments.

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Example: Using the same £250,000 loan over 25 years at 3.5%, your monthly payments would be £729.17. At the end of the term, you would still owe the full £250,000 but would have paid £218,751 in interest.

Loan-to-Value (LTV) is the ratio of the loan amount to the property’s value. For example:

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• Property value: £100,000

• Deposit: £25,000

• Loan: £75,000

The LTV is £75,000 ÷ £100,000 = 75%.

The answer is leverage. By borrowing money, you can enhance your investment returns.

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• Without a mortgage: Investing £100,000 into a property appreciating at 5% annually could grow to £338,000 after 25 years, with rental income of £16,900 per year.

• With a mortgage: Using £100,000 as deposits across four properties worth £100,000 each, you could control £400,000 in assets. After 25 years, at the same 5% growth rate, those properties could be worth £1,354,000, generating rental income of £67,700 per year.

Yes. With property values and lender criteria constantly changing, it is important to review your mortgage regularly. Remortgaging may help you secure a better deal or release equity.

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Releasing equity allows you to raise cash through a lump sum or drawdown facility, which you can then reinvest into further properties to grow your portfolio.

Whether you are self-employed, an expat, a foreign national, or have irregular income, we can help. Our brokers are experienced in working with complex cases and liaising directly with underwriters to ensure a smooth, stress-free process.