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Remortgaging should be considered periodically as part of a regular review of your buy to let mortgages.
A buy to let remortgage might be appropriate in the following circumstances:
Buy to let mortgage deals may have early repayment charges for the first few years. At the end of a fixed or discount period the charges will probably end. This is a good time to review your mortgage.
Check out these buy to let remortgages here.
Comparing buy to let remortgage deals
When comparing buy to let remortgage offers think about your future objectives.
Do you want to pay off this mortgage or is it your intention to sell the property at some point in the future.
An Interest only loan will minimize your mortgage payments but will not pay off your mortgage. This type of loan might be suitable if you intend to sell the property after a period to realize a gain. Alternatively you may have other investments running alongside which will ultimately clear the loan.
A capital and interest loan will clear your mortgage over the mortgage term. This type of mortgage might be suitable if you are buying property as a form of retirement income.
Will you want to sell or remortgage in the short term?
A remortgage scheme with short or no redemption penalties may be the answer. If your plan is to build a portfolio of buy to let properties, then you will want to be able to release equity to fund future purchases.
Will you want to release equity in the future
How soon in the future. Does the new lender permit further advances.
Do you want the security of a fixed rate over the next 2, 3 or 5 years, or are you happy for the interest rates (and your mortgage payments) to fluctuate.
Fixed interest rates will enable you to budget into the future. If interest rates were to start rising, you may find it difficult to pass on those interest rates to your tenants.
Fixed interest rates are generally higher than discounted rates. Lenders price fixed rates according to what they think will happen to interest rates in the future. Fixed interest rates mortgages will also have early repayment charges during the fixed period.
Do you want the facility to make overpayments
Several mortgage schemes now offer the facility to make overpayments. What type of overpayments are these likely to be; lump sum or monthly overpayment.
How much money do you want to raise
You may be able to remortgage up to 80% of value. This figure may be limited by the rental income. Lenders use different calculations to assess the maximum loan. Please phone to discuss with an advisor. The capital raised could be used to fund another property purchase.
Check you are eligible.
Lenders use different criteria for assessing applicants. Some base their lending decision on earned income, others purely on rental income.
Some lenders are currently offering fee assisted remortgages. Please contact us for an up to date assessment of the mortgage market.
As independent mortgage brokers we are in a good position to assist in the choice of scheme.
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