A buy-to-let mortgage is a mortgage taken by landlords to purchase properties specifically for the purpose of renting them out. Buy to let offers good rental income along with an increment in the value of the property over time.
With the help of skilled and experienced buy-to-let mortgage brokers in your town, you can get yourself a good mortgage deal on purchase or remortgage of your buy to let property.
What is a buy-to-let remortgage?
As the name suggests, a buy-to-let remortgage is a process of remortgaging our buy-to-let property. It involves switching one buy-to-let mortgage deal with another, provided the new deal provides you with more benefits. You may choose to remortgage with the same lender or switch to a new lender based on your requirements. We can suggest a reputable free mortgage broker harrow.
How does buy-to-let remortgage work?
Buy-to-let remortgage is like any other conventional remortgage, the only difference being that the property here is a buy-to-let property. As long as you have the required deposit for the new mortgage (which is often higher than other mortgage deals and ranges from 20% to 40%) and meet all the eligibility criteria of the lender, you can go ahead with a buy-to-let remortgage.
The process of remortgaging your buy-to-let property is usually longer if you choose to switch to a new lender as they would make all assessments from scratch. Staying with the same lender would get the work done faster as they have all relevant details about you and the credit/affordability checks will be more lenient.
However, staying with the same lender can have its own drawbacks. It restricts your choices as you will have limited options to choose from. When it comes to remortgaging your property, the utmost importance should be given to the rate and benefits offered by the new deal. If you feel you have a mortgage deal at your disposal that is better than the one you already have and would provide you with financial benefits, you can go ahead with a buy-to-let remortgage, irrespective of your decision to stay with the same lender or switch to a new one.
Why should you remortgage your buy-to-let property?
When it comes to buy-to-let remortgage, one should switch to a new deal only when there are benefits to be derived from the same and if the circumstances are right. Here are some of the major reasons why mortgage holders choose to remortgage their buy-to-let properties:
Fixed rate coming to end
Once the fixed term of your buy-to-let mortgage ends, you would be switched to a standard variable rate (SVR) where the interest rate is higher. This may lead to you paying more interest over time. Remortgaging to a new buy-to-let deal that provides you with a lower interest rate allows you to extend your fixed-rate term and save money spent on your mortgage repayments.
However, always ensure that the costs to be incurred for closing your existing buy-to-let mortgage and getting your new deal approved are less than the benefits offered by the new buy-to-let mortgage deal.
Improving your property
As a landlord, you are responsible for keeping your buy-to-let property in good shape and looking after repairs and maintenance. It is advisable to undertake regular checks of your property and make arrangements for keeping it well-maintained. Moreover, you may want to carry out improvements within your property that add to its overall value.
These activities are often costly and demand you to spend a fortune. Remortgaging your buy-to-let property helps you gather additional funds that can be used for improving your property and keeping it well-maintained.
Increasing your rental income
The value of your property is bound to increase over time. If it has been a while since you purchased your buy-to-let property and are sure that its value has increased significantly over time, you can remortgage and raised funds for home improvement or deposit for another buy to let.
If you do home improvement of your buy to let which may get you higher rent. If you purchase new buy to let with deposit raised from remortgage, you will get additional rental income.
Settling existing debts
On many occasions remortgage is used to pay off the current debt. If you have a personal loan or credit card to pay it is worth looking at the options to clear the current debt by raising funds via remortgaging which could save you on higher interest rate. Always seek advice if you going to raised funds against your property as you may loseyour property if you don’t keep up with monthly payments.
Adding or removing a partner
If you have to take off some one’s name from ownership of property it is often call transfer of equity. Your property needs to be remortgaged if you want to remove or add some one from your existing mortgage.
However, whether you need to add or remove a partner, your lender would carry out credit and affordability checks for each of the partners before approving a buy-to-let remortgage.
The scope of buy-to-let remortgage is fairly vast and you will often encounter multiple options to choose from. As you embark on this journey, make sure you work with a competent local mortgage broker who would help you make the right decisions.