How to remortgage a buy to let property

Why choose Mortgage Saving Experts for Buy-To-Let Mortgages?

Remortgaging a Buy-to-Let Property

There is a slew of reasons why you would want to remortgage your buy-to-let home, and the good news is that it’s entirely feasible! We’re sometimes asked whether you can remortgage your buy-to-let property at Mortgage Saving Experts. We can assist you to get a buy to let mortgage.

Increasing your property portfolio – remortgaging to release equity for a deposit

One of the most common reasons for a buy-to-let (BTL) remortgage is to buy a second property and use the equity from the first as a deposit.

Remortgaging to expand your portfolio can be achieved in several ways, and the best one depends a lot on the current offers. You might do a complete remortgage, pay off the original buy-to-let, replace it with another, consider a second charge via a secured loan on the property, or look at a portfolio mortgage if you own four or more properties.

Renovating and improving the property

Remortgaging your home to release equity to reinvest in it for renovation or expansion is permitted by mortgage lenders. Increasing the property’s value reduces the lender’s risk while still increasing the rental yield, making it a good deal for both you and the lender.

Buying out a partner

If you started as a landlord with a partner and now want to go solo, you’ll have to buy them out to become a single owner.

Paying other debts

Unfortunately, a Buy To let remortgage does not allow you to raise money to repay your unsecured debts for example loans and credit cards.

Improving your rate

This works in the same way as a regular residential remortgage, you are looking to remortgage to a different lender to get a lower rate of interest than your current lenders variable rate. Mortgage Saving Experts will assist you in selecting the best deals available and work with you to ensure that you make the best choice for your circumstances.

Converting your buy-to-let to a residence

You’ll need to turn your BTL mortgage into a residential mortgage if you want to move into your rental home. This can be achieved as a conversation with your current lender or a complete remortgage with a different lender.

Changing your buy-to-let mortgage to a residential mortgage would potentially incur fees, but if you only need the property for a short time, it might be worthwhile keeping the tenants in place and take out a short-term rental yourself.

Factors that will affect your buy-to-let remortgage

When you refinance your home, you will be subjected to the same financial scrutiny as when you first applied for a mortgage, including a full credit check and an affordability review.

If you want to remortgage your buy-to-let property for whatever cause, you must retain the same high level of financial discipline that got you the loan in the first place. Landlords who want to develop a property portfolio should pay close attention to their cash flow and credit history to ensure that they are still a desirable investment for a mortgage lender.

Other factors will include:

• How good has your property’s rental been and how much rent do you achieve now?
• Tenants who are currently residing in the property (some tenants, such as sitting tenants, students, or those on benefits, can be seen as less desirable than others and the type of tenant you have will depend on which lender you can go to remortgage)
• Your reason for remortgaging
• The loan-to-value (LTV) of your planned remortgage
• Your current earnings
• The property’s current market value

Help and mortgage advice from Mortgage Saving Experts

For a more in-depth discussion and no obligation advice, contact us today. We’ll do whatever we can to help you find the best remortgage deals available. Our team of experts are experts in the field and know the best lenders to approach for you to get the most out of your remortgage, so please fill out our contact form or give us a call.

Buy to let remortgage criteria

• Borrow up to 85% loan to value (LTV)
• No minimum income options
• Lenders with no upper age limits
• Flexible affordability calculations
• 2, 3, 5, and 10 year deal periods
• Cashback, free valuation, and other incentives available
• Borrowing based on rental income from property
• Switch from residential mortgage to buy to let mortgage (Let to Buy)
• Unlimited portfolio sizes
• Remortgage to like for like loan, or to raise capital
• Houses of Multiple Occupation (HMO) options with no maximum number of bedrooms
• Multi-unit blocks options with no maximum number of bedrooms
• Special Purpose Vehicle (SPV) buy to let accepted
• Trading limited company buy to let accepted
• First-time buyers accepted
• Repayment or interest-only mortgage payment options
• Finance for property development or auction purchase

It pays to take a hard look at your property financing now if you want to ensure future profitability or have funds available for future development.

How does portfolio size affect the finance available to landlords?

As the PRA redefined the size of property portfolios, it made two significant adjustments to how mortgage financing for them could be measured.

The Interest Coverage Ratio (ICR) adjustments for landlord loans were made to ensure that they would be able to keep up with their payments if interest rates rose dramatically. Or offset rental voids as well as the expense of major repairs or renovations.

How does the stress-testing work?

Many lenders have many different ways of calculating this and it is impossible to write down all the calculations of criteria as there are so many variants, for example, whether you own a property, whether you have income, whether you are a higher rate taxpayer or basic rate, whether you are buying with a limited company or in personal names, Loan to Value, amount of rent, etc.

If your BTL mortgage interest rate is 3%, you’ll be checked for affordability at 5.5 %.

If you choose a 5-year fixed rate the lenders will be able to lend you more money in comparison to any other interest rate you choose like a 2 or 3 year fixed rate. The reason for this is because you have security of knowing what your monthly payments will be for 5 years.

What is the minimum amount of rent that your properties would earn?

Find out how much rent the property will get per month then you can start to look for buy to let mortgages to see if the lender will help you. If not get in touch and we will search the whole market for the cheapest mortgage deal for you

Whole-portfolio stress testing

Rather than reviewing each borrowing application separately, lenders must now evaluate the financial resilience of the portfolio held by a client as a whole.

A high-value property (for example, in London) may have been purchased for its capital gains potential, but its monthly rental return would be insufficient to get a sufficient mortgage on because the field is to low or the rental income required may not be high enough for you to be able to borrow the amount you need.

Only new BTL mortgage applications were affected by the 2017 regulatory changes.

What property portfolio information will you need to supply?

• Full addresses of each property.
• Property values, mortgage balances, names and account numbers for all lenders, monthly payments and rental incomes from all your properties.
• For each house, there are tenancy agreements and management company agreements.

Call us to discuss your options

Portfolio finance is inherently complicated, and it’s really only an independent broker that can review the financial specifics of all your property assets and look through all the options available in the market to provide you with unbiased guidance on the financing arrangement that would best fit your current needs and potential plans.

We are not tax advisors, and we always encourage you to seek professional tax advice. However, we will highlight every proposal’s potential benefit and drawback.

Contact us, and we’ll set up an appointment for you to speak with one of our portfolio finance experts at a time that is convenient for you.