Buy-to-Let Remortgaging
A Buy-to-Let remortgage involves shifting your loan to another lender or a different product from the same lender. This will make sure your loan is always on the most favourable terms available.
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- Can I remortgage a Buy-to-Let property?
- Read our Buy to Let guide
- Try our Buy to Let mortgage calculator
- What are the criteria to remortgage my Buy-to-Let property?
- Should I remortgage my Buy-to-Let property?
- When shouldn’t I remortgage my Buy-to-Let property?
- What are the fees to remortgage my Buy-to-Let property?
- Buy-to-Let remortgage rates
- Can I remortgage my Buy-to-Let property and increase my borrowing?
- Buy-to-Let remortgage lenders
- Specialist Buy-to-Let remortgage advisors
When you take out a mortgage, there will typically be an initial set time period when the interest rates are more competitive. This is usually two, three or five years. After this period, the rate will revert to the lender’s standard rate, which is invariably higher. The best time to investigate remortgaging is a few months before this is due to happen.
A Buy-to-Let remortgage is sometimes a complex process of research, negotiation, and completion of finding alternative lenders. And products that can provide a cheaper interest rate than what your current loan will switch at the end of the initial period.
Can I remortgage a Buy-to-Let property?
Yes, it’s possible to remortgage your Buy-to-Let mortgage to a new deal.
The reason for doing so is clear – to find a better deal than the one offered by your current lender. So, you’ll avoid an increase in costs and potentially make savings on your outgoings – therefore, maximizing your profits. However, it’s important to take more than just the interest rate into account when considering your options. Some other things to consider are:
- Your current lender is likely to charge a standard exit fee. If you are still within a tie-in period on your current scheme, you will also face early repayment charges. You’ll need to check your mortgage agreement or annual statement for all the details of any early payment fees.
- Taking out a new mortgage could also come with further costs. This could be valuation fees, arrangement fees and legal costs. You’ll need to check that the extra costs incurred, don’t exceed the amount you expect to save in interest payments on a new deal.
- Lastly, common sense will tell you to make sure the terms of the new mortgage suit the plans and needs for your investment. Will you be tied into early repayment charges, or will you be free to move the mortgage after a certain period? Be aware of attractive offers designed to tempt you into a particular scheme e.g. tracker mortgages.
Your Buy to Let Situation
Why you would like a Buy to Let mortgage is unique to you. We approach mortgages for your individual needs.
What types of Buy to Let mortgages are there?
There are a variety of things to consider when looking into a Buy to Let mortgage.
Contact us
The best way to find out if you qualify for a buy to let mortgage is to speak to a mortgage advisor.
What are the criteria to remortgage my Buy-to-Let property?
There aren’t really any significant differences when comparing it to a standard Buy-to-Let mortgage. Of course, each lender will have their own adjustments, but lenders generally consider the following:
- Your age – lenders are typically willing to lend to anyone between 21 and 75 years old. So, most people will not be penalised. But there are some lenders who are prepared to lend to anyone over 18. And some might even put no upper age limit on applicants.
- The monthly rental income – This is a vital figure when it comes to calculating how much a lender is willing to allow you to borrow.
- Your personal income – Many lenders will not need you to prove an independent income beyond that from rent. But, in some cases, lenders may want to take your income from a salary or other sources into consideration. They could require you to have a personal annual income of at least £15,000-£25,000. As this is a specialist area of lending, most lenders are quite flexible and could be willing to consider your self-employed income as a portfolio landlord.
- The equity in the property – This is the figure that is remaining from the total value of the property after the remaining mortgage loan amount is taken out. When taking out a new mortgage, this is usually the deposit. When remortgaging, it is the money that has already been invested in the property. Buy-to-Let lenders will usually need there to be at least 25% equity in the property. However, there are some specialist lenders who will be willing to lend to someone with as little as 15%.
- Your experience – If you have just one Buy-to-Let property, then lenders may perceive you as a higher risk and impose stricter criteria for the mortgage. However, if you are an experienced landlord with a portfolio of properties, lenders are likely to be more lenient.
- The type of property – Some lenders may prefer to avoid certain types of properties, or those built using certain construction methods. Additionally, some flats and apartments in certain situations may have restrictions or risks associated with them. So, lenders will usually need to see a greater amount of equity.
For your Buy-to-Let property business to thrive, you will need to make sure your margin of profit from the rental income is as high as possible. Ensuring that your Buy-to-Let remortgage deal is on the most favourable interest rate available will ensure costs are kept down.
Some landlords may have seen their property increase significantly in value. Therefore, they will want to take advantage of this extra equity by releasing funds in a remortgage.
They could use it on renovations or to buy an additional property. Others may want to remortgage to change some of the terms of their loan. For example, switching from a fixed-rate mortgage to a variable rate product.
It’s important to make sure that any changes to your financial arrangements will be to your benefit in some way. It’s also important that you’re aware of situations in which you shouldn’t remortgage your property.
- If you are tied into a mortgage, then you may need to pay fees to release yourself from that plan. This could work out to cost you more than staying with your current arrangement and interest rate.
- A new mortgage is likely to entail many set-up costs – for example, arrangement fees, legal costs, and survey fees. This is particularly worth thinking about if you only have a small balance remaining on your loan.
There are a number of fees involved when remortgaging your Buy-to-Let property:
- Lender’s arrangement fees – You are likely to get the most competitive rates from a lender if you can pay an arrangement fee. This can range from being a fixed amount to a percentage of the loan value. Many lenders will allow the fee to be added to the loan amount, so you will not need to pay it upfront. However, you should note it will remain there for the life of the mortgage, meaning you will pay interest on it.
- Application or product fees – These are similar to arrangement fees but are simply payments to access a particular service. As such, they are likely to be always charged upfront, and will be non-refundable in cases where your mortgage is not complete.
- Valuation or survey fee – A big part of a lender’s assessment is a survey to ascertain the property’s value. A lender will want to determine the property’s condition, type, and value to be sure of the amount they should let you borrow. There are many lenders who offer this service free of charge as part of the arrangement, but many others will charge you.
- Legal fees – Again, some lenders will have their own legal representative to act on their behalf. However, others will ask you to cover this cost.
- Mortgage broker fees – You should always make sure you get the best advice from a qualified, experienced broker. This will help ensure you get the most suitable and favourable deal. Mortgage brokers are essential to this end and will usually charge a broker fee for their services.
Buy-to-Let remortgage rates
Trying to the best Buy-to-Let remortgage rates can be a time consuming exercise. Every lender will have their own packages, deals and criteria, each with their own incentives and drawbacks. It’s essential to know exactly what your priorities will be in your new mortgage.
Each lender will have their own methods of analysing information about you, such as your income and the potential rental revenue. This will help them confirm the amount that they are willing to lend in a remortgage deal. Lenders are typically most interested in the following:
- How much equity you have in the property.
- Achievable market rental rates.
- The type of property.
- And your own personal income.
- Experience as an investment property owner and landlord.
The remortgage amounts can vary a lot, even with the information given, and some lenders may reject your application. For this reason, it’s important to go over your application with a specialist Buy-to-Let advisor. They will be able to guide you through what can be a financial minefield if you don’t know what to look for.
If your property has gained in value since the time you first took out your mortgage, then yes, it is entirely possible. Usually, however, there are various criteria that a lender will need to consider during the application process.
Unfortunately, estimates of the size of a loan that the lender is willing to extend may go down as well as up. This all depends on your individual circumstances. If you want to increase your borrowing, then you should get in touch with our team today. One of our expert advisors will be able to guide you through the process.
Many high street banks and building societies offer Buy-to-Let mortgages and remortgage products. However, they are unlikely to be at the most competitive rates.
You’ll find that the best rates are offered by specialist lenders who you won’t find on the high street or online. These lenders and deals are accessed via a specialist mortgage broker with expert knowledge of the mortgages landscape.
If you’d like to access exclusive deals, get in touch with us and we will pair you with one of our expert advisors.
Specialist Buy-to-Let remortgage advisors
Making sure you have the most suitable mortgage for your needs is often more important than getting the best interest rate. You should be sure the mortgage meets your plans and goals, both short-term and long-term.
It’s also vital to understand the varying criteria lenders use when assessing your suitability for the loan. Mainstream lenders offer some Buy-to-Let products, but the best deals are available through specialist lenders you won’t find on the high street. Therefore, you’ll need to use a specialist broker to access them, like The Mortgage Centres.
Our experience in the market means we will know which lender will be able to offer the best deal to suit you. Contact us today and we will put you in touch with one of our specialist brokers.
Phil Scott
Director
About the author
Phil has worked in the financial services industry since 1992, having started with a large insurance company. He went self employed in 1996 as an Independent Financial Adviser before setting up his first company, Needham Market Home Financial in 1999.
After four years, he decided to concentrate solely on mortgages and related insurances, and The Mortgage Centres was born. Since then, Phil has been influential in the opening of several new offices as the business continues to grow.
Qualifications
Financial Planning Certificate: 1,2 & 3
Year Attained: 1992
Certificate in Mortgage Advice and Practice (CEMAP)
Year Attained: 2001
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