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Can you Remortgage a Buy to Let?

Exactly like a residential mortgage, you can review your Buy to Let mortgage as and when you want to, although most people would tend to do it when they’re coming to the end of their initial fixed-rate period, to avoid penalties.

You do find that because it’s Buy to Let, for some reason people forget to review their mortgage and it just reverts back to the Standard Variable Rate, which can be quite expensive.

Certainly in the last two or three years, property prices have increased dramatically, and equally, rental income has also increased.

Another reason, other than interest rates, for remortgaging a Buy to Let, is to release equity. I assist a lot of portfolio landlords with this, where they have multiple properties and take equity from their existing properties and use the funds as a deposit for their next Buy to Let purchase.

How do I Remortgage a Buy to Let? 

I deal with these on a daily basis and have clients that will contact me when their deal comes to an end or they’re wanting to release some money from a property.

I would assess how much rental income they are obtaining and establish the value of the property,  then work out how much we could potentially release and which is going to be the cheapest interest rate we can secure, and then apply to that new lender. We would also organise solicitors and valuations but the good thing about remortgaging a Buy to Let, is that many lenders provide free legal fees.

Can I be refused a Buy to Let Remortgage?

Yes, the lender would go through the same credit scoring system that they would with a residential mortgage, so if there is adverse credit or the property is in a very bad state, for example, has no kitchen or bathroom, then yes you could be declined.

How long does it take to Remortgage a Buy to Let?

You tend to find that the actual mortgage aspect of remortgage is quite quick, because many lenders merely want the valuation.  They’re not assessing your personal income, they are looking at the rental income to support the mortgage, so the process can be quicker.

The majority of lenders would probably require a copy of the assured shorthold tenancy agreement and a valuation of the property to check the rental yield. Then you’re just reliant on the solicitors and how quick they can actually get to completion.

What costs are involved?

The cost, including any arrangement fees, the broker fee and solicitors is potentially very little, as you may find that by swapping to a lower interest rates, the savings made could cover costs within a couple of months . Some lenders can have an arrangement fee, and when I’m researching and recommending a lender I’ve got to make sure it’s a big enough mortgage to support that arrangement fee; if it isn’t, I would look at an alternative, without an arrangement fee. 

You would normally have solicitors fees to pay, but, as I mentioned, most lenders have a package available that offers free valuations and free solicitors, so the cost might be negligible.

What are the benefits of Remortgaging a Buy to Let property?

If you need equity out of that property, you have the ability to potentially borrow funds at quite a cheap rate, in order to grow your portfolio.  Equally, when people fail to review their mortgage, it reverts onto a Standard Variable Rate, which are more expensive than residential rates, and average at just over 5%, so it’s just good financial planning to review and remortgage.

There are specialist lenders in the Buy to Let market, some that I use on a very regular basis, are not normally available directly to the borrower. They only provide  mortgages via intermediaries, like a Mortgage Broker, like myself. Therefore the benefit of a Mortgage Broker when you’re looking at Buy to Let, is possibly greater than for residential purchases, because they have access to many more niche lenders.

Your property may be repossessed if you do not keep up with your mortgage repayments. The Financial Conduct Authority does not regulate some Buy to Let Mortgages.