Majority of interest-only landlords view sale as exit strategy
Almost three-quarters of buy-to-let landlords with interest-only mortgages plan to sell their properties at the end of the term to settle the debt.
A study of landlords by BDRC Continental found that 72% planned to sell their rental properties to pay off the outstanding mortgage debt.
The research firm found that 21% were planning to overpay their mortgage each month to clear the debt and it said this method was particularly popular with landlords who hold a smaller number of properties.
Writing in a blog for Mortgage Solutions, BDRC Continental director Mark Long said that while many residential borrowers with interest-only mortgages did not have any plans in place to pay off their loan, buy-to-let landlords were more clued up.
“There is currently a great deal of noise around interest-only lending in the residential market, where this type of product, though important, remains relatively niche for well understood reasons.
“It is a very different situation in the buy-to-let market, which is dominated by interest-only borrowing,” he said.
“Buy-to-let lenders should be reassured that, unlike their interest-only residential counterparts, the vast majority of landlords have given significant thought to meeting their obligations.”
Article courtesy of Mortgage Solutions