Buy-to-Let Remortgage

Making your Buy-to-Let business as self-financing as possible involves two things. Maximising your rental income and minimising your mortgage commitments.

When buying a new property to let, trying to get the best possible mortgage deal is a given. But equally important is to keep the mortgage on the best deal at any given time. For many Buy-to-Let landlords, that can mean periodically remortgaging the property to get a better deal.

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What is a Buy-to-Let remortgage?
An introduction to Buy-to-Let mortgages
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Useful Information
- Can I remortgage my Buy-to-Let property?
- What is the criteria to remortgage my Buy-to-Let?
What are the best Buy-to-Let remortgage lenders?
What are the best Buy-to-Let remortgage rates?
Should I remortgage my Buy-to-Let?
Why shouldn’t I remortgage my Buy-to-Let property?
What are the fees to remortgage my Buy-to-Let property?
Buy-to-Let remortgage FAQs

Author: Carl Shave - CEO and co-founder

Last updated: 23 Nov 2024

What is a Buy-to-Let remortgage?

A Buy-to-Let Remortgage works in a similar way to a traditional remortgage. When you originally take a mortgage secured on a property it will often have a rate which will be valid for a set period. This is usually 2, 3 or 5 years.

After the initial period, the rate expires, and the lender usually transfers the mortgage to a higher rate.

An ideal time to do a Buy-to-Let Remortgage is usually a few months before the rate is due to increase. You will need to look at alternative lenders that will be willing to take on the mortgage and offer you a better rate.

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An introduction to Buy-to-Let Mortgages

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Useful Information

Can I remortgage my Buy-to-Let property?

The attraction of remortgaging to a lower interest rate is obvious; the savings made, turn into clear Buy-to-Let profit. However, it is important to consider more than just the interest rate when considering a Buy-to-Let Remortgage.

The key with Buy-to-Let remortgaging, is to consider all the costs involved. There will usually be a standard exit fee from your current lender. Therefore, if you are within this period, early repayment charges (which could be in the range of thousands of pounds) will apply. Check your mortgage offer or annual mortgage statement for details of any product-specific repayment fees.

Some other fees involved when taking out a new mortgage are arrangement fees, valuation fees and legal costs. Ensure that you take the total costs of remortgaging into account when comparing the savings, you could make on the new mortgage.

Finally, ensure that the terms of the new mortgage are to your satisfaction. Does it tie you in with early repayment charges, or are you free to remortgage again later? Is it really the type of mortgage product you want?

For example, don’t let an attractive tracker rate product reel you. As you may rather have the stability of a slightly higher fixed rate.

What is the criteria to remortgage my Buy-to-Let?

Although each lender will view each application differently, the qualifying criteria will remain consistent throughout. Some of the main thing’s lenders will consider are:

Your age is important. Most Buy-to-Let mortgage lenders will lend to those aged 21 between 75. There are, however, a few lenders on the market that will lend to anyone aged 18 or over. And some will even have no cap on the maximum age at the time of application.
The monthly rental income will be considered in all instances. Lenders will use this against their internal lending matrix to determine how much they are willing to lend.
Your personal income may be considered. While some lenders may not require you to have any personal income above your rental income. Others may require you to have a personal income of £15,000-£25,000. Some lenders may be willing to consider the income you receive from being self-employed as a portfolio landlord.
The amount of equity available in the property after your proposed loan is taken out. Typically, Buy-to-Let lenders will require at least 25% equity in your property. Although, there are a number of lenders that will lend on a Buy-to-Let property with as little as 15% equity.
Your experience as a landlord is usually assessed. If you have been a landlord for many years, then lenders may look at you more favourably. On the other hand, if you have just one Buy-to-Let property then the lending criteria could be more restricted. This is all based on the lender’s perceived risk.
The type of property you want to take a Buy-to-Let remortgage on is also important. As some lenders will shy away from lending on properties with non-standard construction. Along with this, flats and apartments may have different restrictions. Therefore, some lenders may require a larger amount of equity.

The criteria for a Buy-to-Let Remortgage can differ from lender to lender. So it’s important to speak to an experienced advisor who can secure you the best Buy-to-Let remortgage deal for your personal circumstances.

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What are the best Buy-to-Let remortgage lenders?

With a variety of lenders available on the market today, you may find yourself not knowing where to start. In many cases, the most suitable lender for your remortgage may in fact be your current one. This is because they are already familiar with your property and yourself. So, there will be no need for additional underwriting and the process could be comparatively smooth.

However, if your circumstances have changed since you first obtained your mortgage, your lender may not be willing to give you a remortgage plan. Or it could be that your current lender’s rates are no longer the most competitive. In which case you may prefer to look elsewhere.

You can end up spending a lot of time researching the wide range of lenders, but this will never give you the full story. It could be that the most suitable product for you is from a specialist lender. These lenders are typically only available through a broker and as they are not on the high street or online.

The best way to identify the right lender for you is to talk over your situation with an expert advisor. They have an in-depth knowledge of the market and are liaising with providers of every kind daily. They’ll be able to recommend exactly which lenders to approach – both mainstream and specialist.

What are the best Buy-to-Let remortgage rates?

Trying to find the best Buy-to-Let remortgage rate can be quite time-consuming. And at the end of the day there, is no ‘best rate’ offered by the ‘best lender.’ This is because lenders will approach every application differently.

When looking at your application there is quite a lot of technical information that needs to be analysed. Lenders will normally start by looking at how much equity you have in the property. Then they will review achievable market rental rates, property type, personal income, and your history as a private landlord.

Even with all the information above, different lenders will offer you varying amounts, and some will outright decline to lend. That is why it’s important to speak to an experienced advisor, who can help you navigate the market.

Some of the rates that our advisors can source are truly exclusive and only available through brokers.

One of the main reasons when remortgaging a Buy-to-Let property is to keep your mortgage on the best possible product. For many landlords, the best product is the one with the most cost-effective interest rate.

For a Buy-to-Let business to succeed, you want the profit margin to be as high as possible. Therefore, getting the best possible mortgage rate is a core strategy in achieving this.

However, there are other reasons landlords choose to remortgage. If a property has experienced strong house-price growth and has plenty of equity, you might want to remortgage and take a further advance to release cash. This cash could be used to expand your portfolio or renovate a property.

For others, remortgaging represents an opportunity to change some other aspect of the loan. This could be switching from a variable-rate product to a fixed-rate mortgage.

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As with any financial transaction, it’s important to make sure the transaction will benefit you in some way. While remortgaging can be a great way to save money, it’s important to understand when you shouldn’t remortgage.

You may still be tied into a product rate with your current lender. Remortgaging will effectively mean you may get a better rate. However, to break out of your current product could be costly and therefore negate any savings you could make.
Any set up costs will also need to be considered, especially if you do not have a large outstanding balance. Often, when looking at alternative lenders you may need to pay lender arrangement, survey, and legal fees.

What are the fees to remortgage my Buy-to-Let property?

When remortgaging a Buy-to-Let mortgage there are several fees that should be considered:

Arrangement fees to the lender. Lenders will usually offer their most competitive rates if you are willing to pay this. These fees can be a fixed amount or a percentage of the loan. Typically, lenders will allow you to add this on top of your mortgage borrowing, meaning you do not have to pay it upfront, although, you will have to pay interest on it.
Application or product fees. These are like arrangement fees. The difference here is that a lender will usually want these fees upfront. In most instances, if your remortgage doesn’t go through, then these fees are non-refundable.
Valuation or survey fee. Part of assessing your eligibility to borrow is the actual assessment of the property you are offering as security. A lender will assess the property’s value, condition, and type to determine if and how much to lend. While some lenders may offer this service free of charge, other lenders will charge you.
Legal fees. Some lenders will provide a legal representative to act on their behalf to complete the transaction. Other lenders will insist that you pay for this service.
Mortgage broker fees. It’s always important to get the correct advice and to try and secure the best Buy-to-Let mortgage rate. Mortgage Brokers are essential to this process and will usually charge a broker fee for their service.