Why would a landlord remortgage?

With house prices still booming, remortgaging activity is as lively as ever. The question is… 

Should you be remortgaging too?

The spearing arrowhead that is the property market at the moment leaves little room for landlords to rest on their laurels and not hunt for a better mortgage deal.

What is remortgaging?

In case you’ve not yet 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 doing this…

House prices spiked another 11% in August which is the 12th consecutive month of growth. With the cost of living crisis creeping imminently, 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?  

Landlords with over 11 properties are favouring remortgaging rather than extending their portfolios, reports BDRC on behalf of Foundation Home Loans.

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.

Surprisingly, landlords were offsetting the dreaded second-time buyer’s stamp duty by purchasing through a limited company. However, this trend seems to be subsiding with the current financial climate and with more people favouring purchasing as an individual.

Let’s review 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?

The task of remortgaging 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.

Right now might not be the exact climate for catching a good low-interest deal, but get ready to pounce in eight months or so.

Releasing equity from your property 

If you’re considering your second property for buy-to-let purposes, this is a strong move to achieve it.

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.