Just like anyone else with a mortgage, many landlords will be looking to keep costs as low as possible, especially when their deal comes to an end.
An expert comparison call with our broker partner, Mojo Mortgages, can help you to compare buy-to-let remortgage rates and make the most of your income potential.
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Yes you can. Buy-to-let mortgages have set deal lengths in the same way that residential mortgages do, so it’s perfectly possible to remortgage when you come to the end of your term, to save ending up on the lender’s standard variable rate.
Lenders will re-evaluate your affordability, as well as your rental income when considering your BTL remortgage application. Criteria vary from one lender to the next, but you’ll typically need to:
Have owned the property for at least 6 months
Have a reliable history of rental income at the level expected by the lender (usually at least 125% of your monthly repayments
Have tenants that the lender approves of - some will object to student or benefit-reliant tenants
To ensure you find the most suitable lender for your buy-to-let remortgage, it’s a good idea to speak to a broker with knowledge in this area, like our partners at Mojo mortgages.
There are a number of reasons you might choose to remortgage your buy-to-let investment property. If balanced correctly it may be possible to increase your rental yield either through simply reducing the cost of your repayments to increase the profit margin, or by improving your property to increase the desirability and rental value.
Here are some of the main reasons you might choose to remortgage a buy-to-let investment property:
If your deal term is about to end, remortgaging to a new buy-to-let deal can save you from falling onto the lender’s standard variable rate (SVR). SVR rates are the lender’s default rate, and are usually set substantially higher than their other deals.
This means that even if the remortgage rates available to you are higher than the rates on your existing deal, you could still save money by avoiding them.
If you’ve noticed that buy-to-let rates have started to fall across the market, it may be possible to secure a lower rate than the one that you’re currently on. However, keep in mind that the majority of deals will have early repayment charges (ERCs) unless you’re within the last 6 months of your deal.
If you do plan to pay ERCs, the new rate would need to be significantly low enough that you don’t end up paying more to remortgage than you would save on a new deal.
Many landlords use equity from their investment properties to cover business costs or expand. When assessing your application, lenders will ask why you want to release equity from your buy-to-let property.
They may consider:
To purchase additional properties
To improve or repair existing investment properties in your portfolio
To consolidate business debt, or personal debt
Although keep in mind that each lender has different terms.
Like any remortgage, the rates available to you depend on your circumstances. Lenders will look at your current LTV (Loan to Value) as well as the success of your rental property to date. The rates available to you are still based on risk, so those with lower LTVs and simply wanting to swap deals will typically be able to access lower interest rates than borrowers looking to release equity, for example.
Buy-to-let remortgage rates are likely to be higher than residential ones, however, because buy-to-let mortgages are a commercial mortgage product. This means that they are also typically more expensive when you purchase an investment property compared to a residential home too.
There are not really any more disadvantages to remortgaging a buy-to-let property than there are for a residential property. No matter what type of property you’re remortgaging, it’s a good idea to weigh up any savings that you’d make, versus the cost of remortgaging.
The fees associated with a buy-to-let remortgage, such as the arrangement, legal and valuation fees, may be slightly higher than for residential products. This is because commercial borrowing is generally more expensive. However, you could argue that the personal risk is lower, as you’re not using your own residential property as collateral for the loan.
Many landlords may, understandably, feel that now isn’t the best time to remortgage their buy-to-let property, as rates are currently higher than when most of them likely last took out a new mortgage. However, with rates higher across the whole market than they were 2 and 5 years ago, if your deal is coming to an end, you’ll likely pay more if you don’t remortgage.
This is because, while buy-to-let deals cost more now than they have in recent years, standard variable rates (SVR) are still typically at least a couple of percentage points higher than the other mortgage deals available. If you choose not to remortgage, you’ll revert onto your lender’s SVR, once your current deal ends.
Much like any other remortgage, those mortgage applicants who present the least amount of risk to lenders are likely to get the best buy-to-let remortgage rates. All lenders differ, but generally, to be considered low risk you’ll need to:
Have reduced the LTV of your borrowing - this is achieved by repaying your loan but also if your property value has risen since you bought it
Have strong affordability and credit history
Be remortgaging to switch deals - rates are typically higher if you want to release equity
Have successfully let out the property to date - lenders will be more cautious if your rental property has remained vacant for long periods of time or is not fetching the level of income expected
Yes you can. If you only temporarily want to let out your residential property you can simply apply for a ‘consent to let’ from your lender. This allows you to let out a residential property, usually for a fairly short set period of time. This can be helpful if you’re travelling or if you want to rent out your property whilst you remortgage onto a buy-to-let mortgage permanently.
Yes it’s possible to convert a buy-to-let mortgage to a standard residential mortgage. Keep in mind that you won’t be able to live in the property until the mortgage deed has been transferred, however.
Both repayment and interest-only mortgage options are available to buy-to-let customers, although not all lenders necessarily offer both options. While most customers prefer to pay interest-only repayments on investment property, you can either:
take out a new buy-to-let mortgage with a capital repayment option to purchase a investment property, or
switch to capital repayment, should you already have an interest-only mortgage
Lenders 'stress test' buy-to-let mortgages to ensure that the borrower can afford the mortgage repayments in the event that rental income is paused. For example, if you have no tenants in place.
Stress testing has been more stringent in recent years due to the high interest rate environment and cost of living crisis, which led to landlords' income been seen to be more vulnerable. However, in 2024 improved confidence in the buy-to-let market can be seen as small rate reductions have begun.
Whether you have a buy-to-let mortgage in your own name or purchase through a limited company buy-to-let, it’s possible to remortgage at the end of the term, just like any other mortgage.
Keep in mind, however, that not all lenders offer limited company buy-to-let mortgages, so your pool of lenders will be limited to those that do when it comes to remortgaging.
A buy-to-let remortgage takes around four to eight weeks to complete, depending on your circumstances and the complexity of the property. Leasehold properties can take longer, much like with residential property.
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YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The FCA does not regulate mortgages on commercial or investment buy-to-let properties.
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