Why Buy to Let Remortgages Are Advantageous Right Now


Remortgaging a buy-to-let property is a common practice among landlords. Many landlords will look into buy to let remortgages in order to get a better deal or to avoid a spike in their monthly interest rate. This is especially true in first time buyer buy to let deals where it is very easy to get a better deal if you remortgage at the end of the benefit period before you switch to a standard variable rate. 

What Does It Mean to Remortgage Your Property

Remortgaging is the process of switching lenders for your property’s mortgage. It can be done for different reasons and can happen at different times. Some choose to remortgage after two years while others do it after fifteen years after their initial mortgage deal. The remortgage procedure is the same as if you were applying for a first time buyer buy to let mortgage. You will need to provide proof of your income and undergo a credit check. It can take up to ten weeks to finish this process.

When Is the Perfect Time to Remortgage?

Even if most of the mortgages last for twenty-five years, all of them have something in common. They all have an initial period of time where you have to pay a certain monthly rate. After that period ends you will be switched to a bigger rate, depending on your mortgage type. You will most likely have to pay bigger interest rates after the initial period is over. Buy to let remortgages are the best way to have access to better deals for your property.

There are two standard types of mortgage rates available. It is a benefit to apply for a remortgage for both of them:

 – Fixed Rate Mortgages, like the name suggests, have a pre-set initial monthly rate that cannot go up or down. This initial rate can last anywhere between two and ten years. When the fixed-rate period ends, you will be switched to a standard variable rate. Most first time buyer buy to let mortgages come with this type of payment rate.
 – Tracker Mortgages are set around the Bank of England base rate. They can increase or go down according to the Bank of England. Tracker mortgages can also last anywhere between two and ten years. 

Top Reasons You Need Buy to Let Remortgages

There are many reasons you should start looking into buy to let remortgages. Most people who applied for buy to lets will apply for a remortgage in the first ten years. The most common reasons to look into remortgages are:

Getting a Better Deal

It is no surprise that the first thing on the list is also the most common one. Most people will choose a remortgage deal because their fixed rate payment is about to end. They will soon switch to the SVR (standard variable rate) and they will have bigger monthly costs. There is always a possibility to get lower interest rates than on the fixed rate term, but it is certain you can get better rates than if you were to switch to the SVR. 

The only downside to applying for a remortgage is that you might have to pay an early repayment charge. This EPR is usually a percentage of the mortgage value. You can check with your mortgage broker if that is the case for you. First time buyer buy to let mortgages usually have more chances to have an early repayment rate. It is always recommended to apply for a remortgage through a broker in order to get the best deal for your new one.

Raising Capital 

Another popular reason why landlords apply for buy to let remortgages is so that they can raise more capital for their future property investments. People who want to release equity for a deposit or purchase another buy-to-let property should consult with an expert mortgage broker to see if their lender has any rules concerning property portfolio growth. 

The stamp duty holiday is an example of why many investors want to buy more property. With taxes on a break, they are more driven to push their investment plans forward. House prices have also grown in the last period making it possible for investors to take out equity on their current mortgages. 

Getting Home Improvements 

Borrowers who want to take out equity on their mortgage can also use it for home improvements. Most first time buyer buy to let mortgages can benefit from this. Energy Performance Certificates are part of the reason why many homeowners choose to remortgage. Making improvements to insulation and walls is a quick way to improve the EPC rating of a property. Another reason is to upgrade the property to improve rental yields. Most lenders will allow for property upgrades for rental yields, even for first time buyer mortgages.

What If You Are on a First Time Buyer Buy to Let?

Generally, lenders have stricter rules for first time buyer buy to let mortgages. Not having an experience in buy to lets can make lenders less likely to offer you more money because you don’t have a proven experience yet. This is where an expert mortgage broker can come in handy. 

Negotiating with the help of a mortgage broker will increase your chances to get a remortgage deal. If you want to get home improvements you do have a high chance of getting approved for a remortgage. However, if you want to get a better deal or raise capital you can only succeed with the help of a broker.

Buy to let remortgages are always advantageous. Your financial situation can take a turn for the worst when the fixed rate payment plan is over, which is why you should take to your mortgage broker and see what remortgage options you have. 

First time buyer buy to let mortgages are always guaranteed to profit from this the most because they come with higher interest rates than regular mortgages. Your mortgage broker can help you with the paperwork and guidance to get a good deal after you finish your initial payment plan.

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