Mortgage Company Reviews

Union Home Mortgage Review – Interest Only vs Repayment Mortgages vs Making Mortgage Overpayments

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Union Home Mortgage Review – Whats The Best?

Most of us are aware that interest only mortgages have the cheapest repayments but are the most expensive in the long run. But do you know just how expensive they are compared to repayment mortgages?

Taking it a step further, you can save huge amounts of time and money by making small overpayments every month.

If you’re a property investor, you really should consider the benefits of making mortgage overpayments on your investment property portfolio to slash the term of your mortgages and the amount of interest you pay.

This video looks at interest only mortgages vs repayment mortgages vs making overpayments on your mortgage to show you how much time and money it can save you over the life of your mortgage.

Thanks for watching the Union Home Mortgage Review video!

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27 Comments

  1. Simon C
    July 26, 2021 at 7:00 am

    Interesting. I suppose the advantage of interest only is using the cash to make investments that yield higher % returns than the mortgage costs. But Section 24 changes this?

  2. Idowu Sholanke
    July 26, 2021 at 7:00 am

    Great eye opener Mike. Thank you

  3. David Welsh
    July 26, 2021 at 7:00 am

    Hey Mike I’ve just subscribed! Love what you guys are doing with the podcast. I am going to weigh in here but as a fellow Scotsman I’ll try and do so tactfully mate…

    Good points about repayment mortgages;
    • who doesn’t want to own their portfolio outright? It’s kind of a no brainer
    • they act as a hedge against interest rate rises. That might not happen anytime soon but at some point in the next 25 years you will end up having to take a higher rate mortgage and I’d way rather do that on a 50% ltv than a 75% deal
    • they could be a hedge against tightening of lending criteria. If 60% Ltv products became the norm again

    The bad points;

    • Inflation, that £150,000 will have the buying power of at most around £70,000 in today’s money. Will it be more affordable to pay off in 25 years time? Probably
    • Cashflow, you’ll have some but it would be seriously reduced. If you invest in single let’s for example.
    • if you experience any length voids or drop in tenant demand. Many investors with perfectly good properties must have this year. Then you are still committed to higher payments.
    • That hedge against rising interest rates or tighter lending criteria can be mostly negated by using long term, ie 5 year, fixed rate mortgages. You should be aware of what’s happening in the market and with your own circumstances by the time you come to the end of a 5 year deal.
    • A lot of the strategies discussed are geared toward quickly replacing an income I think that’s difficult to do with repayment mortgages.
    • it could limit the ability to scale quickly or create a need to scale more with the reduced cash flow.

    So yeah those are just my thoughts feel free to crucify me in the comments if you wish people I’m pretty chill about these things anyway. As a final point I personally don’t want to grow my portfolio through capital growth, I think force that initial appreciation get it remortgaged at the best GDV you can and leave it be. It’d be great to think in 25 years time it’ll be sat on 40% Ltv and I don’t have a huge debt to worry about when I’m 60!

    Anyways cheers guys, all the best 🤙🏻

  4. maxdreamcreator
    July 26, 2021 at 7:00 am

    Shame to see you are leading people in the wrong direction. Interest only is the only way to financial freedom. DO NOT aim to repay your house. Keep your payment as small as possible, save the money and invest it on the side instead. By the end of the 20 years term not only you will be able to pay your house back but you will be able to afford another 2 houses on top. Do not under estimate the power of compounding capital interest. Do not listen to this no sense advice….

  5. Thomas Bobby
    July 26, 2021 at 7:00 am

    I got a transfer of $45,000 from expeditetools,com through their transfer tool.

  6. Down To South London
    July 26, 2021 at 7:00 am

    great video, Mike!

  7. armand navarro
    July 26, 2021 at 7:00 am

    Extremely bias

  8. Lee B
    July 26, 2021 at 7:00 am

    Forgot one thing. Inflation ! With Interest only the money you owe ends up being worth less. Same figure worth less. 25% -30% cheaper over 10 years based on 2.5 or 3% inflation. Or am I wrong ?

  9. John Doe
    July 26, 2021 at 7:00 am

    The best loan is no loan

  10. Brits first fitness
    July 26, 2021 at 7:00 am

    This is not the way for biy to kets,interst only is better for buy to lets.

  11. An Old Sandwich
    July 26, 2021 at 7:00 am

    It is an interesting idea for a bit of safety on a few prime properties, to cover the rest of the portfolio. I do think it is more viable on HMO's than standard buy-to-lets. With the changes in the tax laws it is already stretching some peoples coverage, so an increase could be dangerous. Still with a decent HMO it should be flexible enough if you do not need to cashflow and wanting a bit more security.

  12. Laurentiu P
    July 26, 2021 at 7:00 am

    You don’t pay nothing the tenants pays for you

  13. Paul Stone
    July 26, 2021 at 7:00 am

    The major flaws that seem apparent are not seeing the advantage of leverage from the bank, using other people's money from rent, inflation and investing spare cash. Lets say a young person gets a 35 year interest only mortgage. Of course the total amount is more, but the rent (someone else's money) takes care of it, not your own. The cash-flow is greater, so you'd have an extra £100+ to invest monthly in an account with greater interest compared to the lower interest saved on early repayments. For example, set aside the extra £100/month for total US stock market, averaging a VERY conservative 6%/year after inflation. Once compounded over 35 years that's makes a certain £140,000+. Not only would this pay off the principle with money to spare (which after 35 years inflation erosion, averaging 2.5%/year, has substantially increased your buying power), you also have a property worth 4-5x the initial purchase price. One could easily pay off the principle with the £100/month investment, and have spare, or refinance/sell house to pay it off. To me that makes interest only mortgages (and certainly avoiding early repayments) a clear winner because you didn't use your own money and took advantage of compound interest and inflation. Any thoughts? Have I overlooked something?

  14. davesimm
    July 26, 2021 at 7:00 am

    Finally, someone who gets it. It worries me that so many other property investment "gurus" and their sheep followers push so heavily the buy BMV/refinance/release equity model, and stick on interest only mortgages, and rinse and repeat thinking solely about the cash flow without any planning towards economic changes in the future. Interest only is a good way to get cash flow and get started, but for me, it's not a long term strategy. If interest rates rise, if inflation slows and your property doesn't appreciate 5% per year as planned, if taxation on rental income increases (again!), if the massive increase in affordable housing decreases rental incomes, Brexit…. Or a myriad of other factors change things for the worse … I want to know that my risk/liability and outstanding finance is always decreasing… Not that after 25 years i still owe exactly what i started with.

  15. Jorge Williams
    July 26, 2021 at 7:00 am

    Thanks for posting this explanation about intrest only vs Repayment Mortgages vs Making Mortgage Overpayments.
    Keep posting this type of video.
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  16. Jake Hanrahan
    July 26, 2021 at 7:00 am

    Good understanding of basic calculations.
    Bad understanding of the much deeper benefits; accessibility, release of equity, re-investing to secure hundreds of thousands of much larger wealth at the end of 20 years, rather than just saving 40k through higher repayments.

  17. Journey2DebtFreedom
    July 26, 2021 at 7:00 am

    Great Video, this is exactly what I’m trying to do and slowly increase the mortgage payments with the rental income.

  18. dugz bop
    July 26, 2021 at 7:00 am

    Interest only you benefit from a better cash low. Buy and hold for the long term and due to inflation the debt on the property is eroded over time. Why would you want to repay quickly and benefit from the property in 10-20years from now when you can leverage the debt and make a profit now and also refinance for other investments. Tenants pay down the debt anyway

  19. craig Whitaker
    July 26, 2021 at 7:00 am

    Very one sided argument. You didn’t make a case for interest only.
    As someone already pointed out, you haven’t taken into account the effect inflation will have on the £150k at the end of the 25 year term. Also remortgaging every few years to release equity (at a sensible LTV) to re-invest back into your portfolio is Tax free!!!! Very, very important!!!

    Should point out, I like your content but this just doesn’t tell the full story.

  20. Joshua Fox
    July 26, 2021 at 7:00 am

    Good content but delivery is a bit boring

  21. It’s Erin
    July 26, 2021 at 7:00 am

    Well your calculation is flaw because you did not take into account inflation and also the money used for the over payment is better spent investing which would make better return.

  22. Gary Smith
    July 26, 2021 at 7:00 am

    I would be interested to know which form of mortgage would you take out nowadays, if you were just starting out with plans on building a HMO portfolio?

  23. Spitfire2020
    July 26, 2021 at 7:00 am

    Another great video – would be great to find out HOW interest only mortgages end – I.e lets assume you have a interest only mortgage for 25 years – how do you pay the capital back on the £150k loan – do we simply assume the property has doubled – sell the property and keep the left over cash?

  24. Alan Legg
    July 26, 2021 at 7:00 am

    Its easy, they sell you an interest only, you make every payment on time but the poor return on your endowment plan leaves you with a shortfall, you do not have enough savings, so they throw you out, see, simple isnt it.

  25. Amjad Ali
    July 26, 2021 at 7:00 am

    I cant understand how they class interest only mortgage as a "mortgage" after speaking to http://www.banksreclaims.co.uk I discovered that you are basically renting a property that you think you own and after 25 years you could lose

  26. April van Es
    July 26, 2021 at 7:00 am

    The figures sound good because you've chosen a 5% interest rate and forgotten about inflation. In the last 25 years £200k would be worth over £700k according to the Bank of England http://www.bankofengland.co.uk/education/Pages/resources/inflationtools/calculator/default.aspx I agree with the last person to comment. Better to maximize borrowing and buy more property than pay down lending.

  27. Bartosz Ciuba
    July 26, 2021 at 7:00 am

    why u dont consider the fact that increased cash flow while on interest only could be re invested and hugely outperform savings when using repayment mortgage. sounds like a conflict of interest to me when u advertise your hmo's achieving ROI 20%+ and then advise to think abt reducing debt at 5% interest