Buy to Let Remortgages

Homeowners and landlords alike, tend to remortgage about 6 months before the end of their mortgage deal.

This gives them plenty of time to get the process sorted, ahead of their deal ending. It also helps you to avoid an early repayment charge with your existing lender.

If you have carried out a renovation project on a buy-to-let property, then you can remortgage against its improved value.

Whatever the reason for your remortgage, as a mortgage broker, we can help you on your buy-to-let remortgage journey.

There are alternative products available to a buy-to-let remortgage that will need to be considered, whether they’ll be suitable will depend on the rates and what you are looking to achieve.

Products such as bridging finance which is a type of short-term lending facility often used by landlords to renovate doer upper properties which can be unmortgageable in their current condition for rental or sale.

Also, there are secured loans which are second mortgages on existing properties that can be arranged quickly and will not trigger any early redemption changes if you’re currently tied into a deal.

There are also product transfer mortgages which may be available by your current lender offering you a new deal, we’ll need to compare these are part of the mortgage advice process.

Again, seeking trusted mortgage advice from a buy-to-let specialist will help you navigate through the criteria and match you with the best product and rate for your situation.

Buy-to-let mortgage interest rates are typically higher than residential ones, however, they work in a similar way.

Generally, the more equity that you have in the property the less risk the mortgage is to the lender; therefore, they offer you better rates.

The interest rates work in bandings, for example purposes, an 80% buy-to-let remortgage deal will be more expensive than a 60% deal.

The rates change daily so it’s always worth speaking with a mortgage broker, like us, for them to shop around for you to find you the best deal.

We also have first time buyer buy-to-let mortgage deals available, helping first time landlords on their property investment journey.

The amount of equity that you can release from doing a buy-to-let remortgage will depend on your current loan to value ratio, i.e., how much of the property do you own already.

A buy-to-let remortgage for capital raising is different from a residential mortgage as you can only borrow a maximum of 75% to 80% of the property value compared with 90% or even 95%.

We find that many of our landlords choose to release equity for 3 main reasons, one to buy another investment property, two to repay debts and three to pay for property improvements.

Here are the main fees associated with a buy-to-let remortgage along with estimated costs:

• Broker fees – usually in the region of £199 to £499 depending on your situation and how complex the case is.
• Legal/Conveyancing fees – you’ll need a conveyance for your remortgage, often conveyancers do special remortgage deals such as £250 to £500 all in for a simple buy-to-let remortgage.
• Valuation – this can range from a free valuation to £199 approximately depending on the buy-to-let mortgage lender.  Other properties can get more complex.
• Insurance – the only mandatory insurance you’ll need is buildings insurance, this will be in the region of £20 to £30 per month for a landlord.
• Arrangement/Booking fees – this is more complex and is very hard to compare, what some mortgage lenders will do is give you a ‘no fee’ deal with a higher rate.  Others look less attractive on paper with big £1,000 to £2,000 fees however the interest rate is much lower.

Our mortgage broker team have specialist software that will compare these deals on a like-for-like basis to recommend the best one.  You’ll also have options to add any arrangement fees to the mortgage itself if required, these will accrue interest like the remaining balance also.

During an application for a buy-to-let remortgage, you’ll have the option to select a new fixed rate deal, typically over 2,3 or 5 years or move on to a variable rate deal.

What you choose and what we’ll recommend will depend on your attitude to risk, whether you are looking to make large overpayments to bring your balance down, and your view on whether rates will increase or decrease in the short term.

Once you’re on a fixed rate deal, you won’t be allowed to move to a variable rate without penalty until the new deal ends.

Many of our landlords like to have the peace of mind of a fixed rate for budgeting purposes.

If you are currently a homeowner and are looking to let out your current property, this is called a let to buy mortgage and we can help you with the full process.

If you are currently in the middle of a fixed rate buy-to-let mortgage deal and want to remortgage there might be early redemption charges.

If this is you, our mortgage broker team will help you consider the other products and services such as bridging finance and secured loans to see if the remortgage is a viable option.

Often with landlords, a good investment opportunity can come along that is too good to miss.  Landlords are more open to paying early redemption changes as they will factor in any costs incurred into the overall investment return.

There will be no early redemption costs payable if you are outside of your fixed-rate deal and are paying your lenders standard variable rate.

During any remortgage application a valuation will always be performed to check the property is worth what you say it is.

The type of valuation your new lender will perform will be based on how much you are looking to borrow and your loan to value, the lower the loan to value the more likely a simple desktop or drive by valuation will be performed.

If you are borrowing 75% to 85% of the value of the property, your new mortgage lender might send a valuer round to assess the situation.  Also, they’ll look at rental values in the area to double check that your rental calculations look achievable.

If you have owned the buy-to-let property for a long time, hopefully it’s gone up a bit in value so you can qualify for better loan to value mortgage deals.

As part of the application process for a buy-to-let mortgage application, you’ll usually need to provide the following documents:

• ID and proof of address
• 3 months bank statements
• 3 months evidence of earnings
• Existing mortgage details
• Buy-to-let portfolio information
• Latest tenancy agreement for the property
• 3 months evidence of rental payments received

There may be other documents required by your new mortgage lender as part of the process on an ad-hoc basis after they’ve reviewed the above.

Also, we’re experts at self-employed mortgages and bad credit mortgage advice should we need further proof of earnings or find something on your credit report.

Our brilliant mortgage processing team are great at pre-empting any additional documents that your lender might require so we’re able to give you a head start with this.

The buy-to-let remortgage process is fast, we are typically able to get you a mortgage offer within around 2 weeks for a straightforward deal although, more complicated mortgage situations can take longer.

Your conveyancing process will take longer, probably in the region of 3 to 4 months realistically.

It’s important to give yourself plenty of time ahead of your buy-to-let mortgage deal finishing. We recommend starting the remortgage process 6 months ahead of your end date to avoid reverting on to a high standard variable rate temporarily.

Yes, you’ll need to pass affordability and credit checks for a new buy-to-let remortgage deal.  You’ll need to evidence to your lender that the mortgage is affordable to you should your tenant not pay or move out and that your creditworthiness.

These checks are more stringent for first time buyer landlords and those higher loan to value buy-to-let remortgages which are riskier to the lender.

Rental income will be assessed by looking at evidence of the income received and the lender seeing what the going rate is for a property like yours in the same area.

The rental income will need to be a certain % higher than the mortgage payment depending on your new lenders criteria.  You’ll also be stress tested by the lender should interest rates increase in the future to see if the mortgage would still be viable for you.

The money received from a remortgage is tax-free, however, for tax advice it’s always best to speak to your accountant for a personalised answer and recommendation.

Yes, being self-employed, you’ll have to prove your income via payslips or your tax return etc., but the buy-to-let remortgage process will work the same way.

Self-employed mortgage advice is specialist therefore it’s always best to speak to a great mortgage broker team for advice.  Lending criteria is vast and complicated and cannot be easily compared online.  If you’re self-employed, you’ll find having an experienced mortgage advice team on your side invaluable.

Yes, if you are a portfolio landlord looking to do several buy-to-let remortgages at the same time this makes it easier for your mortgage broker.

Also, many portfolio landlords prefer to do this as it keeps their admin easier with only one mortgage lender and one product end date for multiple properties.

The same process will need to be followed; however, it can be more efficient with both your mortgage brokers and your time to do them together.

If the value of your property has increased since you purchased it, this is a good thing for a buy-to-let remortgage as your loan to value will be more.

You’ll have the option to leave your equity in and potentially qualify for a better interest rate or to do a buy-to-let capital raising remortgage to take the money out.

If the value of your property has decreased since you purchased your property this could be problematic during a remortgage application as your loan to value ratio could take you above the 75% or 80% maximum that is allowed on a buy-to-let remortgage.

Your mortgage broker will help guide you here and recommend the best way forward.

Yes, any legal reason is fine for the proceeds of your buy-to-let remortgage.

Example of popular things landlords do with the money are below:

• Buying a new property
• Renovation projects
• Divorce settlements
• Tax bills
• Repay debts, credit cards and other personal loans
• A large purchase
• Buy a holiday let / Airbnb etc.
• HMO investment
• Gift to family
• Supplement retirement income

Every landlord has their own personalised buy-to-let investment strategy, whatever yours is, we’re more than happy to talk through your options.

No, your tenants will not be affected by your buy-to-let remortgage. The only disruption would be if a physical valuation was required by your new lender in which they would need to arrange a time to visit.

We very rarely come across any problems in this area as the valuers are discrete in their work.