Buy to Let Remortgage
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Buy to Let Remortgage
Diarmiud Phoenix talks to us about remortgaging a Buy to Let.
Can you remortgage on a Buy to Let?
Yes, much in the same way as a standard residential mortgage, you can remortgage your Buy to Let. Whether remortgaging is the correct thing to do is entirely dependent on your circumstances at the time. But yes, you’re absolutely able to do that.
Why remortgage your Buy to Let?
There are a number of reasons why someone would want to remortgage their Buy to Let.
The most common one is that their existing lender is not offering a competitive product switch deal, so remortgaging to another lender will get them a better product with a lower rate.
Switching products with the same lender can often be less hassle for the customer – you don’t need to reapply and provide all your bank statements, for example. But remortgaging can often mean you get a better deal.
Another reason might be that your existing lender does not offer other features you might need – like a further advance to consolidate debt or to purchase another property. Some lenders are a bit tighter on debt consolidation.
How do I remortgage a Buy to Let?
It’s very similar to remortgaging a residential property, but a key difference is that you’ll need at least 25% equity in the property, especially in Northern Ireland. Some lenders in England and other parts of Britain may allow 20%.
You’ll need evidence of your income. Most Buy to Let lenders actually assess your affordability through rental yields, so the actual income you’re receiving isn’t as important. But some lenders will require a minimum income.
The usual valuation and legal conveyancing work will be carried out, but generally, the process is much smoother and shorter than a Buy to Let purchase.
Can I be refused a Buy to Let remortgage?
Yes. The most common reason is having run into some financial difficulties or credit problems, such as missed payments leaving black marks on your credit report. That could mean you’re unable to pass the new lender’s credit check.
Other reasons could be if you didn’t fit the prospective lender’s criteria in terms of employment type or their rental yield stress tests. If, for example, you’re no longer resident of the UK, that could present a problem with some lenders.
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How long does it take to remortgage a Buy to Let?
It’s no different from a standard residential remortgage. Typically, we suggest you expect it to take 6 to 8 weeks from the Decision in Principle application to completion. It will always come down to the lender and their caseload at the time. Their administrative procedures will have an effect on turnaround times.
What costs are involved?
Depending on the broker, there could be a broker fee for remortgage work, and there are potentially valuation fees, legal fees and arrangement fees.
There’ll be cases where only some or even none of those charges necessarily apply, depending on the lender, the broker and whatever deals they’re offering at the time.
Legal cost and valuation fees are often free with remortgages generally, but not always. Quite often they’d be included in the deal.
Do you have to pay stamp duty when remortgaging a Buy to Let?
No. Stamp duty is only payable when you’re purchasing a new property. It’s not payable when remortgaging property you’ve already purchased. You would have already paid the stamp duty on the property when you bought it – you don’t have to pay it again.
What are the benefits of remortgaging a Buy to Let property?
Getting a better deal or a lower interest rate than your current lender’s offering is always a popular benefit for a remortgage, as it will save you money. Even a small amount will always be welcome in this economic climate, where we’ve recently had higher rates than we’ve been used to [podcast recorded in October 2024].
There may be other benefits or features with a new lender that your current one doesn’t provide. For instance, some lenders might not allow you to make overpayments, and remortgaging might benefit you there.
You may be able to reduce early repayment charges. Certain lenders set the same penalty in the first year as in the fifth year – that may not be ideal for some people. Others have a sliding scale, so the closer you get to the end of the deal, the smaller the early repayment charges are. That might be attractive for people considering paying a lump sum off the mortgage.
You could also potentially take a longer fixed rate period. If your current lender doesn’t offer the fixed rate period you’re looking for, then it might be better for you to switch.
How can a mortgage broker help with remortgaging a Buy to Let?
Using a broker will always be more beneficial than doing it on your own. We know the market in terms of lending criteria and the latest mortgage deals. We can certainly save you time, money and effort and find you the best Buy to Let remortgage outcome.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
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