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Should I arrange an endowment policy for my interest-only mortgage?


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Hi everyone!

I own two apartments in Liverpool, both with interest-only BTL mortgages. I've been reading around the topic over recent months and I have grown slightly concerned that I don't have a repayment vehicle in place to repay these mortgages at the end of the term.

Do other BTL property owners out there with interest-only mortgages have endowment assurance policies etc. in place to ensure that they are able to repay their mortgages?

Any advice greatly appreciated, as always.

Thanks, James.

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You need to have a plan to pay your mortgages off but I don't think an endowment policy is the answer.

Your options will include: remortgaging art the end of the term; selling the property to pay it off; saving your rent into a stock market investment; saving rent in cash; selling one house and paying off 2 mortgages.

With 20 or so years to go, its not really a problem; with 5 years to go you need a plan.

I have 10 properties which I am planning to reduce in number over the next 10 years when I will be 70yrs. The idea is to end up with maybe 4 properties without mortgages to continue renting.

Good luck :) 

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10 hours ago, james champkin said:

Hi everyone!

I own two apartments in Liverpool, both with interest-only BTL mortgages. I've been reading around the topic over recent months and I have grown slightly concerned that I don't have a repayment vehicle in place to repay these mortgages at the end of the term.

Do other BTL property owners out there with interest-only mortgages have endowment assurance policies etc. in place to ensure that they are able to repay their mortgages?

Any advice greatly appreciated, as always.

Thanks, James.

Most buy to let investors don't have endownment policies to pay off their mortgage principal

In general, there are 2 options at maturity of your mortgage

  • Sell your property and pay off your mortgage
  • Get another mortgage


After a 25 year mortgage term, I would hope that your property price and rent would have appeciated. So the value of your property would be a lot more than your mortgage. And the rental income would be a lot more than your mortgage repayments
 

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Hi guys,

The main reason I ask about this is I've read that mortgage brokers/advisers are required to ensure that borrowers have an appropriate repayment vehicle in place when taking out an interest-only mortgage. I don't recall my broker ever having these discussions with me when he helped me take out my two interest-only BTL mortgages, and so I started to wonder whether I should be arranging something appropriate myself.

Do other investors on here have any policies arranged for this purpose? Or do most simply remortgage the property at the end of their term and continue on interest-only mortgages indefinitely?

Thanks,

James.

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It does depend on what your exit strategy is whether or not you want to pay the mortgage off at all. I haven't given it much thought as its a long timeframe but probably will end up with fewer properties and no mortgages or sell the LTD company. Lots of options and nothing to worry about until the latter stages is my approach

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