Interest-only mortgages talked up

Published on: 09/08/2007

Landlords with buy-to-let properties wanting to ensure that their investments are self-funding should look to interest-only mortgages, one advisory firm has recommended.

Alpha Financial Management has said that such products are the only way that landlords can avoid putting their own money into repayments.

The firm also suggested that notions of a downturn in the market are highly unlikely to result in negative equity because long-term forecasts are more positive.

“For people who want to buy property as an investment unless they want to put some of their own income into the mortgage repayments an interest-free [mortgage] is the only way to actually have a self-funding property,” commented Alpha director Stephen Lee.

“[With a] repayment mortgage the monthly rates are just far too high most people want investments in the housing market where they will be happy to not receive much monthly profit but over time the property value increases.

“The risk of negative equity is probably [limited]. I wouldn’t suggest that people will be left with a huge negative equity for years to come,” Mr Lee added.


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