Long term benefits of interest only mortgages

[maisieelliott_hotmail_com]

Besides the fact the property increases in value, what is the benefit in terms of a long term investment strategy for an interest only mortgage? Because when the interest is all paid off you then don't own the property - so in later life you would either have to pay the entire lot off in one go or then just start paying the mortgage?

[astonthemortgageguy]

I speak to many landlords, most prefer interest only as it keeps the monthly costs down which is handy should you have a prolonged period of time without a tenant. Most also plan to keep the interest only mortgage until the day that they die, with more and more lenders offering BTL mortgages with no maximum age, meaning that they never have to worry about repaying the mortgage

[maisieelliott_hotmail_com]

Oh i see! So the idea is that they know they will never own the property themselves, they are just making money from the monthly rent. What if I wanted to hand the property over to my children though in future? Would the interest only arrangement still continue? 

[astonthemortgageguy]

It would depend on the ownership of the property. If the mortgage is owned in your personal name, the mortgage would likely have to be repaid before your children can take ownership of the property - they could then take their own mortgage to repay the mortgage you have on the property - but they would have meet whatever criteria is requested at the time.

If you own the property via a limited company, the transition should be easier as the way I understand it is you can make your children directors of the Ltd Co and then maintain whatever mortgage is on the property at the time - you'll need to double check this with an accountant, but it will work something like this.