BTL mortgages in the UK are usually arranged on an interest only basis. This makes for lower monthly payments as no capital repayments are being made. You only pay the interest on the loan each month and therefore the capital remaining at the end of the mortgage term will be required to be repaid in full.

A repayment BTL mortgage requires you to pay the interest on your loan, and a portion of the capital borrowed, each month. As such, repayments are higher than the interest only alternative.

Gradually, as more of the loan is repaid, the borrower’s equity increases. At the end of term, both the interest and the balance of capital are settled, and you own the property outright.

A property is usually considered a house of multiple occupation if the household is formed of three or more tenants, who share amenities (e.g. toilet, bathroom or kitchen facilities). This is the most common type of HMO and applies to shared houses, such as student or professional lets.

This BTL mortgage applies when an individual (individuals) purchase a BTL property through a limited company, known as a special purpose vehicle (SPV), and as such, properties and income derived are owned by the company, which can be in sole or joint ownership.

Purchasing BTL properties in this way can potentially offer potential savings for higher rate taxpayers. It is important if you are considering this type of purchase that you take advice and guidance from a fully qualified accountant to understand whether this best suits your personal circumstances.