Growing your portfolio as a landlord or finding yourself having to move into a property you intended to rent out – there are several reasons why you might want to remortgage your buy-to-let property and the good news is that it’s completely possible! At The Mortgage Hut we are often asked if you can remortgage your buy-to-let property and we’re here to tell you yes, you can, and we can help!
Increasing your property portfolio – remortgaging to release equity for a deposit
One of the most common reasons for a buy-to-let (BtL) remortgage is to purchase an additional property and to use the equity from the first as the deposit on the second.
Remortgaging for portfolio expansion can be done in a variety of ways and the right choice depends a lot on the deals available at the time. You could opt for a full remortgage, paying off the original buy-to-let and replacing it with another, look at a second charge on the property or if you own four or more properties, look into a portfolio mortgage that covers them all with one overall loan.
Renovating and improving the property
Mortgage lenders approve of releasing equity from your property through a remortgage in order to put investment back into the property in terms of renovation or expansion. Increasing the value of the property lowers their risk and improves your rental yield, making it a good proposal for both yourself and the lender.
Buying out a partner
If you started your time as a landlord with a partner and now want to go it alone, you will need to buy them out to make yourself a sole owner.
If you have the strong affordability score and confidence to do so, then most mortgage lenders will back you, providing you with the capital you need purchase your partner’s share.
Buying out a partner from a joint mortgage with a buy-to-let remortgage isn’t limited to the core property – you can use the money from one property to secure ownership in another.
Paying other debts
Debt consolidation using a remortgage is not uncommon, but represents a risk for the mortgage lender that is not always appreciated and this means a remortgage to clear unsecured debts is typically offered at inferior rates than those used for other purposes.
That said, the low rate of a remortgage is likely many times better than the debts you plan to clear and will save you in monthly interest. It’s important to have your debt management strategy laid out before risking your property clearing other debts, and you should properly calculate the interest over the term to make sure it is the right choice for you.
Improving your rate
Like a standard residential remortgage, improving the terms of your mortgage is a good reason for looking at refinancing. At The Mortgage Hut we can help you find the best deals available and will work with you to make sure you make the right decision to suit your circumstances.
Converting your buy-to-let to a residence
If you want to move in to your rental property you will have to convert your BtL mortgage into a residential mortgage. This can either be done through your current lender as a conversion or you can take the opportunity to look for better deals as a full remortgage.
Changing your buy-to-let mortgage to a residential mortgage will result in fees, so if you only need the property to live in for a shorter temporary period, it may be worth while keeping the tenants in the house and taking out a short-term rental yourself.
Factors that will affect your buy-to-let remortgage
Any time you move to refinance your property, you will have to undergo the same financial scrutiny as when you first make a mortgage application, including a full credit check and affordability assessment.
If you plan to remortgage your buy-to-let property for any reason, it is important that you maintain the high standard of financial conduct you employed to get the mortgage in the first place. Landlords who wish to build a property portfolio should be especially aware of their cash-flow and credit status to ensure they are always an attractive investment for a mortgage lender.
Other factors will include:
Help and mortgage advice from The Mortgage Hut
Contact us today for an in-depth conversation and no-obligation advice. We will work for you to find the most suitable remortgage deals available. Our team are experts in the field and know the perfect lenders to approach for you to get the most out of your remortgage, so fill out our contact form or give us a call without delay.
Increasing your property portfolio – remortgaging to release equity for a deposit
One of the most common reasons for a buy-to-let (BtL) remortgage is to purchase an additional property and to use the equity from the first as the deposit on the second.
Remortgaging for portfolio expansion can be done in a variety of ways and the right choice depends a lot on the deals available at the time. You could opt for a full remortgage, paying off the original buy-to-let and replacing it with another, look at a second charge on the property or if you own four or more properties, look into a portfolio mortgage that covers them all with one overall loan.
Renovating and improving the property
Mortgage lenders approve of releasing equity from your property through a remortgage in order to put investment back into the property in terms of renovation or expansion. Increasing the value of the property lowers their risk and improves your rental yield, making it a good proposal for both yourself and the lender.
Buying out a partner
If you started your time as a landlord with a partner and now want to go it alone, you will need to buy them out to make yourself a sole owner.
If you have the strong affordability score and confidence to do so, then most mortgage lenders will back you, providing you with the capital you need purchase your partner’s share.
Buying out a partner from a joint mortgage with a buy-to-let remortgage isn’t limited to the core property – you can use the money from one property to secure ownership in another.
Paying other debts
Debt consolidation using a remortgage is not uncommon, but represents a risk for the mortgage lender that is not always appreciated and this means a remortgage to clear unsecured debts is typically offered at inferior rates than those used for other purposes.
That said, the low rate of a remortgage is likely many times better than the debts you plan to clear and will save you in monthly interest. It’s important to have your debt management strategy laid out before risking your property clearing other debts, and you should properly calculate the interest over the term to make sure it is the right choice for you.
Improving your rate
Like a standard residential remortgage, improving the terms of your mortgage is a good reason for looking at refinancing. At The Mortgage Hut we can help you find the best deals available and will work with you to make sure you make the right decision to suit your circumstances.
Converting your buy-to-let to a residence
If you want to move in to your rental property you will have to convert your BtL mortgage into a residential mortgage. This can either be done through your current lender as a conversion or you can take the opportunity to look for better deals as a full remortgage.
Changing your buy-to-let mortgage to a residential mortgage will result in fees, so if you only need the property to live in for a shorter temporary period, it may be worth while keeping the tenants in the house and taking out a short-term rental yourself.
Factors that will affect your buy-to-let remortgage
Any time you move to refinance your property, you will have to undergo the same financial scrutiny as when you first make a mortgage application, including a full credit check and affordability assessment.
If you plan to remortgage your buy-to-let property for any reason, it is important that you maintain the high standard of financial conduct you employed to get the mortgage in the first place. Landlords who wish to build a property portfolio should be especially aware of their cash-flow and credit status to ensure they are always an attractive investment for a mortgage lender.
Other factors will include:
- How successful the renting of your property has been
- The tenants who currently occupy the property (some tenants, such as sitting tenants, students or those on benefits can be seen as less desirable than others)
- The reason for your remortgage
- The LTV of your proposed remortgage
- Your current income
- Your accounts if self-employed
- The new market value of the property
Help and mortgage advice from The Mortgage Hut
Contact us today for an in-depth conversation and no-obligation advice. We will work for you to find the most suitable remortgage deals available. Our team are experts in the field and know the perfect lenders to approach for you to get the most out of your remortgage, so fill out our contact form or give us a call without delay.
Buy to Let Mortgages Expert Article by
Nicola Schutrups
(Managing Director)
The Mortgage Hut