I have outlined some of the major reasons why Buy to Let Remortgage could take place and how we can help in the whole process.
Buy to let Remortgage options – make sure you get the lowest rates and fees and associated cost
Taking out a Buy to Let Remortgage is not just about the headline rate but also all of the other associated costs that come with it for example valuation, conveyancing, broker fees and lender’s early repayment ‘exit’ charges. It can be confusing but we are here to help you make the right selection.
Releasing equity from the property with a Buy to Let Remortgage
During the last 20 odd years we have been blessed as properties have pretty much outgrown every other type of investment. Yes it’s true that during the downturn many people found themselves in negative equity but it’s also true to say there are hundreds and thousands of people who have seen a steady increase in the value of their property. During the early 90s buy to let investment became very fashionable and we saw the emergence of semi-professional landlords. These landlords are now benefiting from the increase in property values. This increase in equity can be utilised to release funds for a deposit or outright purchase for continued property investment.
Change in personal circumstances
Life is not static. Certain events or new life-stages can bring about new needs. For example, providing accommodation for children moving near to a university or maybe divorce. Remortgages can provide a cost effective means to finance these new requirements. We have buy-to-let lenders who will allow up to 85% of the property value to be released for these and many other purposes.
Rise in the reversionary rate of the mortgage
In the distance past if you had a mortgage and you stayed with that lender for duration of the term, typically 25 years. The market of ‘chopping-and-changing’ is now customary. Most buy to let mortgage products are attractive at the outset but become uncompetitive after a honeymoon period, typically two to three years. Sitting on an expensive rate erodes the investment income potential and is nonsensical given the fundamental idea of buy-to-lets is income and capital appreciation. It is wise to be in contact with a Mortgage Professional, such as Niche Advice, and can actively review your portfolio for you to see if its worth opting for a Buy to Let Remortgage.
Your mortgage term is vitality important
In my conversations with even the most avid buy-to-let landlords the term of the mortgage is often not thought about enough in the planning. Twenty-five years might seem like a long time but if the intention is for the rental income to support retirement income it is almost certainty too short. This factor normally only comes into focus when applicants are nearing or indeed starting their retirement. This can prove to be costly as their earned income may well have diminished through reduced working hours or indeed stopped altogether which in turn reduces the choice of mortgages and thus the rates tend to be higher than would they might have been. At Niche we have mortgages that can run up to age 90 with or without income proof but with regulation tightening they might not be around for ever so if this of concern it might be worth looking at a Buy to Let Remortgage now and lock the lender into that period.
Change of property type / status
I receive daily calls from landlords who have been refused a further advance Buy to Let Remortgage from their existing lender. Quiet often this is because the property has been re-configured since the original buy-to-let application, without informing the lender, and it has only come to light that this is an issue when they asked for further funds. The most classic example is a house that has been converted into flats and let to multiple occupants. We can and do help in these situations as we can place mortgages with lenders that are comfortable with this type of arrangement.
The other common example is a property with a ‘residential’ mortgage that has never been correctly converted to a ‘buy-to-let’ one. If the existing lender was to find out the rate would almost certainty trigger a rate adjustment to standard variable rate or an invitation to leave them altogether. This discrepancy nearly always comes to light at the point of applying for a mortgage on a new property and again we can step in with an alternative lending solution to help.
As with all investments taxation is key. The interest on a buy-to-let can normally be offset against the rental income thus making it more tax efficient than raising money on an owner-occupied residential property.
I hope this article on Buy to Let Remortgage has been food for thought and has provided an insight into a variety of reasons why someone might to choose to remortgage on a buy to let basis. At Niche Advice we have invested heavily in staff training and Buy to Let Remortgage comparison tools so that we are sharp on all aspects of buy to let mortgage placement. Unlike other comparison sites we do not push you into completing our enquiry form only to sell data onto other brokers. Unlike other Brokers we do not charge upfront fees.
I take a personal interest in all of the enquiries we handle and I can assure you that we are open and transparent in all of our dealings with our clients.
For more information on how we can help with your Buy to Let Remortgage please contact us on (020) 7993 2044 or alternatively complete our enquiry form on this this page.
Payam Azadi is a partner at Niche Advice Ltd who are Independent Financial and Mortgage Advisers in London.