What is a buy to let remortgage
A buy to let remortgage is when you switch your existing mortgage on a property that you own and rent out to a new mortgage deal, either with a new lender or your existing one.
As a landlord it’s worth looking for a better deal – after all, keeping your mortgage costs to a minimum will help you increase your profits. Remortgaging a buy to let property to a better deal could help you to save money.
If you remortgage a buy to let to release equity, then it may also give you the opportunity to borrow extra funds to expand your property portfolio or do renovation work on your existing property.
If you’re considering a remortgage for a buy to let deposit and have enough equity built up in your current buy to let property, then you may be able to release some of that when you remortgage in order to have a deposit for your new buy to let property – or even to give you enough cash to buy it outright.
Another common reason to do this is if you currently live in a property and then decide that you want to rent it out. In this case, your existing lender won’t usually let you continue with a regular residential mortgage, and you’ll need to remortgage from residential to buy to let.
Bear in mind though that there may be times when your rental property is empty, and you’ll still have to make your mortgage repayments. It’s crucial that you have a contingency fund to meet your mortgage payments if this happens, especially as buy to let remortgage rates tend to be higher than standard remortgage rates.
When should start looking for your buy to let remortgage?
It’s usually best to start looking at buy to let remortgage deals around six months before the end of your current deal. You can remortgage a buy to let property at any time, for example you could consider looking if there are lower buy to let interest rates, or once you’ve built up more equity in the property – both of these circumstances could get you a better deal. However, you need to bear in mind that if you are currently on a deal, you may have an Early Repayment Charge to pay if you leave before your rate ends.
Buy to let remortgage process
At L&C, we can search hundreds of different buy to let remortgage deals from across the market and find the best deal for you. We can even offer a buy to let remortgage comparison against any deals your current lender may be offering. When you’re ready to go ahead, you can submit your application online or over the phone and track its progress online 24/7.
Once we’ve found the right buy to let remortgage rate for you, we’ll then help you to apply for your mortgage, and let you know what documentation is needed. This is likely to include proof of rental earnings and income as well as details about your other outgoings.
The next stage is a valuation, which a lender will need to do before they remortgage your home. If the lender is happy with all the information provided, they’ll issue a buy to let remortgage offer which will outline the amount you can borrow with the terms and conditions of the mortgage. The last stage in the process is completion – once you accept the lender's buy to let offer, your new lender will release the funds, and your solicitor will use them to pay off your old mortgage.
Buy to let remortgage eligibility
Every lender has different eligibility criteria, but we can check to make sure any buy to let remortgage deal we recommend suits your personal circumstances.
As the amount you can borrow is usually based on the rental income the property will generate lenders will typically require that you earn more in rent than you repay on your mortgage. Generally, the rent will need to be around 125% to 140% of the mortgage payment but can be more if you are a higher rate tax payer. You should also take into account that buy to let mortgage rates may be higher than standard mortgages.
The amount you can borrow will also depend on your personal circumstances, and most lenders will require you to have an income from employment or self employment alongside rental income.
Find the best buy to let remortgage deals
Whatever the reason you want to remortgage a buy to let property, we can help you achieve your goals. We’ll give you expert help throughout the remortgage process, and our service won’t cost you a penny – so let us do the legwork to find the best buy to let remortgage rates for you and see how much you could save.
Of course, the less you want to borrow compared to the value of your property, the better the interest rates on offer tend to be, so if you’re in a position to pay off more of your mortgage before applying for a buy to let remortgage, that could help too.
