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Hi All

I am really struggling to decide if to go with  Interest only or repayment mortgages for BTL investing.  I am fortunate where I have a very well paying job and also passive income from investments therefore I do not need any income from my BTL portfolio in the short to medium term (early retirement planning).   I also don’t need any funds from my BTL to purchase more properties as this will come from other income.   Therefore surely it would be better for me  to go with a repayment strategy where I have all the properties paid off unless you can convince me otherwise.  

Thank you 

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Hi Yaserj - I run one company and use the profits to fund my property investment company. We buy 100% unencumbered so that we can benefit fully from the cash flow the rental incomes provide.

The argument against this would be we could have 20 or 30 properties as opposed to 10 if we refinanced and have ultimately higher cash flow overall. If you go with repayment eventually you'll be in the same position. You can always do more but how much do you want to do? You talk about wanting to build an income for your retirement. I can't think of a much better way than have a number of fully owned properties sat renting out whilst you sun yourself on your yacht in the Caribbean.

If you take interest only and buy all your investment properties in a short space of time the mortgages will come to an end all at a similar time. If that happens to be when there's a dip in the market you'll have to put your hand in your pocket to pay the shortfall. If it happens to be at a good time then you'll be quids in. You could space out your purchases it out to mitigate against this but you might not have time depending on your current age.

If you go the repayment route you don't have to factor the above into the equation and you'll get the full cash flow each month during your retirement.

Honestly I'd be interested if anyone, given your specific retirement goals, could make a good case for interest only as you've basically said you don't want or need money now in favour of having it down the line.

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Hi Dave 

Thanks for your reply to my thread. Interestingly I think we have the same model.  I also have a Trading company which funds my Investment company via a Holding company in my case.  I have always bought unencumbered but kept getting told why don’t you ‘put more of your fingers in that pie and benefit from capital gains in the future by using leverage and having x2/x3 more properties. 

Hence my repayment vs IO dilemma 


I hope we are not just creating an echo chamber here but I agree with you entirely. 

take care 



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That's exactly our set up as well. Holding company with two ltd companies underneath. Money moved around as needed.

Probably is a bit of an echo chamber but I think people get obsessed with being 'in property' and forget that it can just be an investment vehicle much like stocks and shares can. It's also VERY difficult to make a lot of money building a portfolio when compared to how some other businesses scale. Many in property don't fully grasp this as property is their world and they haven't run businesses outside of property.

The vast majority of what is written or spoken about comes from people too immersed in property to see beyond it. My main business takes enough financial risk. I don't want leverage in my portfolio adding to my overall level of risk when it's money I've already taken risk to earn... if that makes sense lol.

If I said to the same people I was leveraging my money to invest in the stock market they'd think that was insane but for some reason in property it's different (well to me it's not).

I'd like to see more people open to more approaches and prepared to take individuals circumstances into consideration as well as just yield / ROI numbers.

*Realise I replied to your DM with the above but thought I'd put it here for anyone to read.

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