Remortgage a buy to let

Remortgage a buy to let property

Most customers find it easy to remortgage a buy-to-let (BTL) property. However, it can be difficult for some, especially if the circumstances have changed significantly since the original mortgage was issued.

The best buy-to-let remortgage deal for you will depend on your circumstances and key factors. Please read the article to learn more about these topics or contact us to match you with a specialist in buy-to-let remortgages.

Use our online mortgage calculator as a guide for your monthly repayments now

Remortgaging your buy-to-let is a smart move.

Remortgaging your buy-to-let can be a great way to free equity or change your mortgage terms. It doesn’t matter what reason you have for remortgaging your property. This can significantly affect your monthly payments and your return on investment.

After your tracker or fixed initial rate period has ended, you might be eligible for your lender’s standard rate variable (SVR), usually 4% to 6%.

Example:

Your monthly payments will be approximately £438pm if you have a £100k, interest-only mortgage with an SVR at 5.25%. It may be possible to obtain buy-to-let remortgage deals for as low as 3.9% at 75% Loan to Value (LTV), which would lower your interest rate by 1.35%. This is approximate £325pm. That’s £11,356 per year!!

Unless you use a specialist mortgage broker, you only have access to a third of the Buy To Let mortgages that are available. Enquire here today.

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What the purpose of the Remortgage has on the products that you are eligible

Refinancing a buy-to-let property can impact the deals and mortgage lenders you are eligible for. Your application might be treated differently if you want to transfer to a better interest rate or release equity to pay for home improvements.

Equity from a property that is being sold to be let

While equity you have built up over time in your buy-to-let property can be released, some mortgage lenders may have restrictions. Lenders may be willing to lend a particular amount, depending on the reason for your release.

Continue reading to learn more about the different scenarios you might be able to remortgage to unlock capital and what restrictions lenders may apply to each.

Remortgaging for a deposit

A buy-to-let mortgage is a great way to release equity and pay a partial or complete deposit if you are a landlord.

While this is common, some regulations and rules may restrict landlords. A lender might limit the number of BTLs you can own if you have four or more BTL properties or are a portfolio landlord. This is to lower the risk of owning too many properties.

While most mortgage lenders are happy to accept a portfolio of four BTLs, others will allow for as many as ten properties. Only a few lenders will allow unlimited numbers.

You can also remortgage your existing home to buy a property to rent. Many of our customers desire to release equity this way.

A specialist mortgage advisor can help you decide if a full remortgage or a second charge or a portfolio loan is right for you.

Property Improvement

Many mortgage lenders will allow you to remortgage your equity to buy to let property. This is especially true if you plan to use the money for improvements. As the changes made to the property will increase its value, they’re likely to be even happier.

Buy-to-let in a popular area and using the money to improve the property to make more rent is great.

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Consolidate your debt

Some lenders will limit the loan-to-value (LTV) ratio they offer to debt consolidation customers.

Due to the higher risk of lending for debt consolidation, not all lenders will lend to borrowers who have already incurred debt.

To consolidate debt, you can release equity from your buy-to-let property. This is an easy way to reduce the number of debts and can significantly reduce your monthly expenses.

Understanding how you can convert repayable unsecured debts to interest-only secured loans is essential if you are considering remortgaging your BTL home to consolidate debt is essential. This could put your property at risk. Having a solid repayment plan and talking to an expert is essential before you move forward.

Buyout of a Partner

You can release equity from a mortgage you own as a buy-to-let to purchase another person or property.

Most BTL lenders will accept this. You must do so in your name to reapply for a mortgage assessment. You must apply again even if you stay with the same mortgage lender. This is so that the lender can conduct a new affordability review.

The usual buy-to-let LTV limits are in effect. LTV may be accepted by most lenders at 75%, while some might prefer 80%. Some specialist lenders will take as low as 85% LTV.

Commercial uses

You might consider remortgaging your buy-to-let property to take advantage of a business opportunity such as a building or commercial venture.

It is impossible to release equity with a BTL mortgage for commercial or business purposes. This is why it is advisable to consult a specialist broker like the one we work with.

Send us an enquiry, and we will match you with an expert in commercial mortgages or BTL remortgages.

They’ll be happy to answer any questions and connect you with the right lender to arrange a BTL at your best terms.

Change to a higher interest rate

Instead of letting your BTL loan slip into your mortgage lender’s standard variable rate (SVR), you might consider remortgaging to take advantage of the best buy-to-let deals on the market.

Interest rates can fluctuate, so keeping your mortgages in good condition is essential.

This is best done through a broker who works with all markets.

Send us an enquiry, and we will connect you to an expert in buy-to-let mortgages. They have the knowledge and tools to help you get the best rates.

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Can I remortgage to buy to let my house?

Yes. This is called a buy to let mortgage.

This often happens when someone moves in with a partner or inherits a property they wish to move to. You can solve both of these situations by one of the following:

• Ask your lender for consent to let
• Remortgaging onto a buy-to-let

Accidental landlords

These are two situations where you might find yourself an accidental landlord and need to consider a consumer buy-to-let mortgage.

Remember to notify your lender that your home is being left without a buy-to-let mortgage. This would be considered a breach and could lead to financial ruin.

To ensure you do not breach your contract, you should always consult your lender if your circumstances change.

Remortgaging a buy-to-let loan to a principal residential mortgage

A property owner may want to convert from a buy-to-let to a residential mortgage. You might have split from your partner, and now you want to live in the property you bought to let.

It might be an intelligent move for others who are looking to downsize. You might have a smaller property you can rent out to live in, or you may want to downsize and move to a smaller property to get a better return.

Contact us if you want to change from a buy-to-let mortgage to a residential one. Our expert advisors can help you decide the best path.

Talking to them before you proceed can help you save time and money by helping you find the right mortgage at the lowest rates the first time.

Are you the owner of the property?

Depending on whether you are an individual or a limited business, different deals can be offered by mortgage lenders. A limited company buying property can provide significant tax benefits for investors who have small or large portfolios. This is especially true for taxpayers with higher rates of income.

Limited company mortgages work well if you want to purchase property with a group of people rather than one or two. These are particularly useful if your liability is a concern.

Companies have different lending criteria than individual mortgages. Other company structures also need to be considered.

A lender may require two years of income and net profitability from a trading company if it wants to purchase a property. The directors may require a personal guarantee.

A Special Purpose Vehicle (SPV), a limited company created to buy and let properties, will again require a personal guarantee from directors.

A Standard Industrial Classification (SIC), which identifies the type and business of the company, is also required.

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What the loan-to-value ratio means for the best BTL deals

LTV measures how much money you are willing to borrow and the equity in your property. Remember that every lender is different so the loan value may vary.

If your property is valued at £250,000 and has £200,00 equity, and you wish to borrow £100,000.000 over 25 years, your LTV would be 40%. If you were to borrow £160,000, your LTV would be 65%.

Lenders will lend up to 90%, and some may even lend more.

Our advisors are all-market and have full access to all lenders. This means that they can find the right mortgage for you.

Contact to schedule a no-obligation, free chat. Let them help you save time, hassle, and money by finding the right mortgage for you the first time.

Unless you are a specialist broker, you only have access to a third of the Buy To Let mortgages that are available. Enquire here today.

Remortgages to buy-to-let for people with poor credit

Bad credit is possible to remortgage. We have assisted hundreds of people with poor credit history in remortgaging. It’s almost always the same story: customers contact us after they have been declined by lenders or turned down by brokers.

Here’s a list of possible credit problems you might face as a borrower.

• Overview of adverse credit
• Credit score low
• Mortgage arrears
• Defaults
• County Court Judgements (CCJs).
• Individual Voluntary Arrangements
• Debt Management Plans (DMPs)
• Bankruptcy
• Repossession

Remortgages for bad credit can be challenging to arrange. Brokers and lenders may not understand the customer’s situation so they can treat otherwise eligible customers poorly.

Sometimes customers can be misinformed and told it is impossible to obtain a mortgage because the broker does not have the experience or knowledge about lenders that will consider borrowers with low credit scores.

We can offer expert advice to all customers thanks to our network of advisors. Every advisor we work with is properly trained to deal with your inquiry. They must demonstrate that they understand what they are doing to be promoted.

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What your personal income means for a buy-to-let remortgage

Each lender will give you a different amount of money because they use other criteria. For a buy-to-let mortgage, the minimum income required by most lenders is £25,000 per year. However, some lenders will accept less.

A lender will consider your basic wage and a variety of other incomes. This could include:

• Bonuses
• Commission
• Benefits
• Second jobs
• Investments
• Dividends

Lenders also consider your outgoings and will take into consideration things such as:

• Debt repayments (car lease, credit cards etc.)
• Communication services (phones, internet etc.)
• School fees
• Gas/electricity bill
• Essentials (food and clothing, etc.)

All of these factors will determine how much money you have to pay the mortgage. Most lenders will assess your ability to pay the mortgage if the rate has risen.

The rental income from the buy to let property

Your property’s size, condition and location will all impact the rental income you can generate from your buy-to-let investment. Lenders will usually approve buy-to-let mortgages if they are affordable. This affordability test considers your payment, expected rent, and property value.

Lenders often require that your annual rent equal 125% of your yearly mortgage payments.

If your monthly repayments are £15,000, the rent should not exceed £18,750.

You can check the listings on Rightmove or the local estate agents to see what rentals are available in your area.

Lenders use the Buy-to-Let stress test to verify that you can repay the mortgage interest.

If you have a £150,000 loan and a 5.5% interest rate, your monthly interest payments will be £687.50.

This equation is: £150,000 x 5.5% = £8,250 / 12 Months = £687.50.

This brings the monthly cost to £859.38 by adding the 125% rate for rental income for stress testing.

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Remortgage crunch: Buy to Let Landlords

The benefits of “buy to let” tax relief were initially quite appealing; however, the new 2017 tax rates made landlords vulnerable.

Almost all lenders insist on rental income being sufficient to cover the mortgage and other costs when buying a buy-to-let mortgage.

These costs include maintenance, repairs, agent fees, mortgage interest, and maintenance. A study found that the average cost of buying a “buy to let” house is around £8,359 per year.

Although the minimum rent must be sufficient to pay the 125% mortgage payment, lenders may request a rental income that covers the mortgage payment up to 145%.

What impact can the type of tenant have on buy-to-let mortgages

Lenders may not approve mortgages based on your type of tenant. Specific lenders may disapprove of the following types of tenants:

• Students – Although some lenders are willing to lend to students, they have a bad reputation for students partying and causing damage.
• Tenants on Benefits – This can be seen as a threat, but it is less so if they receive disability benefits.
• HMO – Houses in Multiple Occupation Can be more appealing if tenants are contractors or other professionals
• Sitting tenants This can be a problem with a BTL mortgage because they are legally allowed to stay in the property for their entire life. They also have the right to pass the request on to a relative upon death. They are also entitled to a fair rent, often much lower than the market value. Lenders are reluctant to approve a mortgage because they consider them high-risk.

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What the property type has to do with buy-to-let mortgages

Lenders prefer traditional brick homes with slate roofs. If you do not follow this standard or if you own a property that is considered non-standard, it can impact your ability to get the best deal.

These examples of nonstandard construction are:

• Flats
• High-rise buildings
• Thatched roofs
• Stone Construction
• Tin roofs
• Felt roofs
• Wooden framed homes
• Metal framed homes
• Solar panels

You may be eligible for a loan if you have other property types. Talk to one of our advisors for the best advice about getting the best deal for your property.

How can I get the best buy to let remortgage rates

There are many remortgages available on the market. Each lender has its criteria for remortgaging buy-to-let properties. Many factors influence the best rate, including:

• Credit history
• Your income
• Your deposit size (larger deposits attract lower interest rates).
• How much equity do you have?

Our mortgage specialists have full access to the entire market. This means they can find you the best buy-to-let remortgage rates for your circumstances.

Current UK buy-to-let mortgage rates

Although buy-to-let rates were relatively low at the time of writing (as of this writing), you should consider the future and the consequences of interest increases.

It is essential to consider all costs associated with renting a property when buying to let. You should consider wear and tear, accidental damages, income tax, agents’ fees, etc. Your rent will cover these costs.

Prudential Regulation Authority has recommended that the criteria for buy-to-let mortgages be increased because this sector is more at risk from interest rate rises and landlords fear they won’t have enough rent to cover these costs.

This makes it crucial that you receive the best advice possible when remortgaging a buy-to-let. This is where we step in.

Our expert mortgage advisors are whole-of-market brokers. They will use their experience and expertise to help you find the best buy-to-let mortgage deal.

Fees

Low-interest rates don’t always mean the best deal. It is important to consider the total cost of the mortgage. This includes early repayment fees (ERCs) and setup costs. These can be very high. Any savings can be erased by fees alone.

This is where an expert advisor can help you navigate the pitfalls and traps of remortgaging your buy-to-let property to ensure the best outcome.

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Rates and deals for buy-to-let mortgages compared

You should also consider the total cost of any remortgage deal. Although one lender may ask for a higher upfront payment, it might still be more cost-effective to go with them in the long term if they offered a lower interest rate than another with lower fees. An example:

Lender A offers a fixed rate of 3% for two years for £1,000 fees.

Lender B offers a fixed rate of 3.5% for two years with no fees.

Which remortgage rate is the best for saving money?

Buy-to-let mortgage of £105,000

£107: Savings by choosing the lower rate but paying a higher fee

Higher rate and a lower fee, or lower rate and higher fee?

It might be a good idea to choose a lender with lower interest rates but higher fees if the loan amount is low. If your loan amount is around £200,000, the higher interest rate and fee might be more profitable.

The tipping point is what determines the best deal for the term.

The “tipping point” is where it makes more sense for a borrower to choose a different deal. If the mortgage amount were less than £105k, you would likely choose a mortgage with lower fees.

Some lenders offer buy-to-let mortgages without fees. This allows you to save even more on lower loan amounts.

Is it worth paying a fee when you have a lower rate?

The savings achieved with a lower rate and a higher fee are generally greater as the loan amount increases.

Hypothetical example

A buy-to-let mortgage of £200,000 is possible

Savings by choosing the lower rate but paying a higher fee = £1,043

Finding the best buy/to-let mortgage broker for your remortgage is essential. It could cost you thousands more than it should.

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Speak to a specialist buy-to-let mortgage advisor

Our advisors are experts in this area and can help you secure the best deal on a buy-to-let remortgage.

Call us or submit an enquiry today so we can match your needs with one of them.

Our experts are all whole-of-market brokers with access to lenders in every market.

Contact us today and we will pair you with the right broker to help you find the best buy-to-let mortgage at the most affordable price.

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