Mortgages terms

[malachi]

Hi,
The general consensus appears to be that BTL properties should be funded by interest only mortgages, as these are cheaper each month than repayment mortgages.

However, don't you have to also pay into an endowment plan over the term of the mortgage, so that you build up the capital required to pay off the original loan? Or do BTL investors not bother to do this, on the assumption that they will sell the property before the mortgage term ends? Do mortgage lenders not insist that you set up an endowment policy?

Any thoughts welcome.
Cheers
Malachi

[austin]

Hello Malachi,
What tax benefits are you referring to - presumably the fact that you can offset the mortgage interest against rental income when preparing your annual tax return? But doesn't this point also equally apply to repayment mortgages? Can one type of mortgage be said to be more tax efficient than the other?

I'm just trying to think why anyone at all would fund a BTL with a repayment mortgage, the only advantage I can see is if you are planning to keep the property beyond the length of the mortgage term, can anyone suggest any other reasons?
Thank you
Austin