Buy-To-Let Remortgages

If you’re a landlord looking at remortgaging a buy-to-let property, we’ll explain how it all works, what to do if you need to release equity and how to find the best deals currently available.

Can you remortgage a buy-to-let property?

Yes, it is possible and if you’re a landlord, you might be looking at doing so for several reasons, such as:

• Your current fixed-term buy-to-let mortgage or tracker period is coming to an end and you want to find a new deal
• You’re looking to release equity, make property improvements, consolidate debts, buy out a partner or change specific terms in your current contract.

While remortgaging is usually a relatively straightforward process, working with a specialist mortgage advisor will save you a lot of time and give you a much better chance of securing the best terms currently available.

How soon can you remortgage?

Most lenders will permit you to start the process after about six months, although some have no minimum time period for when you can remortgage. However, in many cases – particularly for fixed-rate mortgages – there may be early repayment charges if you try and remortgage before the end of the agreed offer term.

How long does it take?

If everything is straightforward then it can take around four weeks from choosing your next rate offer to your new remortgage deal coming into effect. You’ll also need to leave yourself time beforehand to look for the right lender and package or ask a broker to do so on your behalf, get your application together and then wait for the lender’s response. So, best to leave yourself between eight to four weeks from start to finish.

How to get a buy-to-let remortgage

Your first step should be to find a specialist buy-to-let mortgage broker as this will save you a lot of time and boost your chances of getting approved at the best terms available.

Using our free broker-matching service you can speak straight away to the right broker by simply enquiring online.

They’ll be able to help with:

• Calculating your current loan-to-value (LTV) and working out whether you require any equity to be released (and the reasons why this may be needed)
• Gathering all the necessary paperwork required for your remortgage
• Downloading your credit reports to check for any inaccuracies or outdated information that can be removed before you apply
• Finding the right lender and securing the best deal for you

What is the eligibility criteria?

Among the usual proof of affordability (income and outgoings) that lenders want to see with any kind of financing, for remortgaging a buy-to-let property they’re also likely to want to know the following:

Loan To Value (LTV) / Equity available

Most mortgage lenders will want to see at least a 75%-80% LTV for a buy-to-let property as they’re deemed slightly more risky than standard residential mortgages due to the potential inconsistency of rental income.

Rental investment income

The amount of rental revenue generated is a key factor in the approval process. Most lenders expect rental income for a buy-to-let property to cover at least 125% of your mortgage payments to allow for repairs, fees and maintenance. Some lenders may even demand you generate up to 145%.

Credit history

Your credit record is not as important a factor for buy-to-let mortgage lenders as it is when buying a residential property. However, lenders will check your history to ensure there have been no severe issues recorded in the last six years such as bankruptcy and repossession.

Other requirements

The type of tenant or property may also be a factor for lenders, with anything remotely deemed as ‘non-standard’ instantly raising red flags for them. Any perceived risks involved might affect how they consider your remortgage application, so if your buy-to-let is a thatched cottage, has a timber frame, is an apartment or is a house of multiple occupancy (HMO), for example, expect to face additional hurdles.

Can you remortgage a buy-to-let property to release equity?

This will depend on your financial position, such as how much equity is in the property and what loan-to-value (LTV) ratio a lender is willing to stretch to, as well as the impact of other factors we’ve already outlined.

Remortgages work in the same way standard mortgages do, in that while there are lenders who will stretch to 85% and upwards, they come with conditions and vary from one to the other.

You can get an idea of what your new mortgage deal could look like if you have an idea of your interest rate by using our calculator below. Bare in mind that this is an approximation, but a mortgage broker will be able to give you the exact figures.

Which mortgage lenders offer buy-to-let remortgages?

Most buy-to-let lenders can offer remortgages but certain stipulations may apply. For example:

• NatWest will not allow you to remortgage for business purposes or to purchase a commercial property, but you would be permitted to for home improvements, a buyout or to buy a property overseas.
• Santander would not accept land sales or for the purpose of repaying a Help to Buy in order to let the property, but it would allow it for debt consolidation.
• HSBC will only allow remortgages on a buy-to-let for the purpose of home improvements up to a maximum of 75% LTV
• Barclays and Santander stipulate you must have owned the property for six months before you can remortgage. However, HSBC and NatWest both allow for Day 1 remortgages.

What interest rates should you expect

Interest rates are increasingly difficult to predict and may fluctuate for some time. The table below gives you an indication of some of the best rates available.

Please note that the above rates are purely for example purposes, and were accurate at the time of writing, but are subject to change at the lender’s discretion. Speaking to a mortgage broker is the best way to find the most up-to-date deals.

Calculate your rental yield

Rental yields are the amount of cash your property generates, calculated as a percentage of its value, and broken down into net and gross values. 8% is generally regarded as a ‘good’ gross rental yield for a buy-to-let investment property. To calculate your rental yield, simply use our calculator below:

Can you remortgage a buy-to-let property with bad credit?

Yes, lenders will accept applications for adverse credit circumstances, however, the situation surrounding it will be the deciding factor on whether you are successful or not. It is still worth contacting a broker to find out more about your prospects. Read more about bad credit buy-to-let mortgages here.

Switching from residential to buy-to-let

Changing mortgages to a buy-to-let can be preferable for several reasons, such as inheriting a home or moving to another property while wanting to keep your existing one as an investment. Stipulations range from excluding first-time landlords; that the buy-to-let mortgage remains with the existing lender; that the deal must be unregulated; or that there must be an onward residential purchase. However, some lenders do not have such strict criteria at all.

Get matched with a specialist buy-to-let mortgage broker

Having an experienced, reliable and impartial mortgage broker to see through your buy-to-let remortgage deal will ease the stress and onus on you to find attractive deals in an obscure marketplace.

The buy-to-let brokers we work with are matched to your exact needs and work diligently on your behalf to get the very best outcome for you to move forward with.

Get in touch or give us a call on 0808 189 2301.