Repayment Buy-to-Let Mortgages

A repayment buy-to-let mortgage pays off the loan over the term, so the property is yours outright at the end. It costs more each month than interest-only, but it removes the risk of a large debt you still owe when the term ends.

Each payment covers the interest and part of the loan. Most landlords use interest-only to keep cash flow high, but repayment suits landlords who want certainty more than monthly income.

For how buy-to-let lending works more widely, see our complete buy-to-let mortgage guide.

How does a repayment buy-to-let mortgage work?

You pay interest and capital every month. The balance falls slowly at first and faster later, and it reaches zero at the end of the term. On a £150,000 loan at 5% over 25 years, that is about £877 a month, against £625 on interest-only. Most lenders offer repayment, but the rent has to carry the higher payment.

	Repayment	Interest-only
Monthly payment	Higher	Lower
Debt at the end	Nothing	The full loan
Equity	Builds every month	Only from rising values
Tax	Only the interest part gets relief	All payments are interest
Risk	Lower long-term	Depends on values and your exit plan

How quickly does the balance fall?

Using the same illustration, a £150,000 repayment loan at 5% over 25 years would leave roughly:

After	Balance remaining
5 years	About £132,900
10 years	About £110,900
15 years	About £82,700
20 years	About £46,500
25 years	Nothing

These figures assume the rate stays at 5% throughout, which it will not in practice. They show the shape: most of the debt goes in the second half of the term.

Which situations do lenders see most?

These are illustrative situations, not Option Finance client outcomes.

Who does repayment suit?

• Landlords who want the property debt-free by retirement, for income or to pass on.
• Investors with strong yields whose cash flow can absorb the higher payment.
• Those uneasy about relying on future property values to repay the loan.
• People with one or two properties rather than a growing portfolio.

How is a repayment buy-to-let taxed?

Only the interest is a finance cost. The capital part of each payment is not a tax-deductible expense, so you pay it from taxed rental profit. Individual landlords get a basic-rate tax credit on the interest, and from April 2027 that relief is given at 22% in England, Wales and Northern Ireland. GOV.UK explains the rules in its guide to paying tax on rental income. See our buy-to-let tax guide.

How do lenders assess it?

Many lenders still run the rental test on an interest-only basis, even if you choose repayment, and check separately that you can afford the higher payment. Others test the full repayment figure, which lowers what you can borrow. Expect them to look at:

• The rent, usually from the valuer’s view or a letting agent.
• Your personal income, as many lenders set a minimum.
• The term, and your age at the end of it.
• Your other commitments, if you own more rentals.

What is part and part?

Some lenders offer part and part, splitting the loan between repayment and interest-only. On the same illustration, putting £75,000 on repayment and £75,000 on interest-only at 5% over 25 years costs about £751 a month. At the end you still owe £75,000, half the interest-only figure. MoneyHelper explains other ways to clear an interest-only balance in its guide to repaying an interest-only mortgage. Compare the options with our interest-only vs repayment calculator or read about offset buy-to-let mortgages.

Frequently asked questions

Speak to Option Finance about repayment buy-to-let

Tell us the property, the rent and your plans for it. We will tell you straight what repayment, interest-only and part and part would cost each month, and which lenders fit.

Book a free initial consultation using the enquiry form below. See our buy-to-let mortgage advice, our interest-only buy-to-let guide and our buy-to-let remortgage guide.