Why would a landlord remortgage their BTL?

House prices have been steady and modest recently, and there has no doubt been annual growth in a stable market. Homeowners are increasingly looking to remortgage their buy-to-let (BTL) properties. 

The most common reason for this is the high number of fixed-rate deals that are expiring, which homeowners are keen to replace with more affordable options, which allows them to avoid lenders’ higher Standard Variable Rates. 

Here, we’ll look into why a landlord would look at remortgaging a buy-to-let, including the benefits of remortgaging. 

What does remortgaging a buy-to-let mean? 

In case you’ve not remortgaged your property before, here’s what it actually means. In a nutshell, when you look for a new mortgage on a property you already own or have a loan on, this is called a remortgage.

You can either switch products within the lender you already use or switch your mortgage over to another provider. Most people use mortgage brokers to help them find the best deal.

Landlords are remortgaging their BTL properties

With the cost-of-living crisis still haunting consumers, landlords are considering how to sidestep the crisis. We’re finding ‘remortgaging’ as the main tactic to swerve the financial punch. 

Whether you’ve just got your first buy-to-let or own multiple properties, it’s important to understand property market trends.

Why are landlords considering remortgaging more than before?  

A third of buy-to-let property owners plan to remortgage in the next 12 months rather than expand. 53% of these landlords have said they would remortgage as an individual as opposed to a Limited Company, but would consider their circumstances nearer the time.

Also, landlords are still offsetting the dreaded second-time buyer’s stamp duty by purchasing through a limited company. 

Data from Foundation Home Loan and Paragon Bank shows that there has been a clear and consistent rise in the amount of new BTL purchases being made through limited companies (over two-thirds), and this is especially true for portfolio landlords and those looking to scale their property business. 

Let’s take a look at the benefits of remortgaging. You need to consider all of the elements of your situation before landing on a remortgage deal.

What are the benefits of remortgaging a buy-to-let?

The task of remortgaging a buy-to-let can appear to be a lengthy one. However, there are benefits such as securing a good deal and free equity that make it worthwhile.

Getting a Better Deal 

Most mortgage brokers will tell you ‘there’s always a deal to be had’ and they’d be right. Competitive mortgage deals are attractive, especially when you see your monthly payment go down.

Steer clear of ‘Lowest Remortgage Rates Ever!’. If it feels too good to be true…well, you know the rest.

Most buy-to-let mortgages are interest-only, which means borrowers could find themselves only paying interest on the loan. They don’t actually make any mortgage repayments.

You can still reap the benefits of being in an interest-only mortgage by finding a deal that lowers your interest rate and monthly payment. To do this, you have to catch the market in a competitively low-interest environment.

Remortgaging a buy-to-let to release equity

If you’re considering your second property for buy-to-let purposes,  remortgaging a buy-to-let to release equity is a strong move to make to achieve this. Releasing equity from your property through a remortgage allows you to gather deposits for a new addition to your portfolio. 

You may want to release some capital and embark on a new property or use the capital toward renovations, which will increase the overall house price. 

Remember, if you’re considering purchasing a buy-to-let property, organise your landlord building insurance and landlord contents insurance before you start the letting process.

How do I remortgage my buy-to-let property? 

If you’ve already gone through the mortgage process, then the remortgage experience won’t be entirely new to you. You’ll have to consider the remortgage 6 months in advance of when your existing mortgage is up for renewal.

CIA has provided a thorough outline of ‘How do I remortgage?’ for your reference.

Are you ready to remortgage a buy-to-let property? We hope we have provided you with some understanding of ‘why’ landlords are on the hunt for deals. Make sure you get in touch for more expert advice for landlords. Visit our advice centre. We provide guidance on everything from property access and disputes to legal issues and much more.