Remortgaging For Landlords


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Remortgaging For Landlords

While there are critical differences between a standard mortgage, and a buy to let mortgage, there are many similarities between the different mortgage types. It should, therefore, come as no surprise to learn landlords can remortgage their property, much in the same way as a homeowner can remortgage their property.

With strong demand for rental property in Woking, it is no surprise many Woking landlords are reviewing their options. Woking landlords looking for remortgaging advice should consider the following issues.

The reason behind your decision to remortgage may impact on the deal you’re offered

There are many factors considered by a mortgage lender when they receive a remortgage application. When a landlord applies to remortgage property, the reasons behind the application influence the decision, and what loans are offered. A landlord looking to release equity to carry out home improvements or to build their portfolio will be assessed differently to a landlord looking to obtain a better rate of interest.

Some of the main reasons a landlord decides to remortgage their property could be:

  • To arrange a deposit allowing them to expand their property portfolio
  • To carry out improvements at their property
  • Debt consolidation
  • To buy out a business partner
  • To take advantage of commercial opportunities
  • To obtain a better rate of interest
  • Releasing equity for a non-commercial reason

All these reasons are valid, but some lenders will look at some of these reasons as being more favourable than others.

Can I remortgage my home to a buy to let?

Letting property when you hold a standard mortgage is frowned upon, and it will contradict the terms and conditions of many landlords. Therefore, if you become an accidental landlord, or you decide to let the property you own, you must inform your mortgage lender.

You will find it is possible to remortgage your property to a buy to let mortgage, and many mortgage lenders are sympathetic in this situation. There are many personal reasons why a person can no longer live in their property and letting the property may be a more effective solution than selling the home. If you are in this position, or you wish to enter the rental market with the property you already own, contact your current mortgage provider, and discuss the matter with them.

Of course, your current mortgage provider may not be able to offer you the best deal, so once you have informed them of the situation, you must review your options. You must find the mortgage which is best for you, and this may or may not be provided by your existing mortgage provider.

Loan to Value affects buy to let offers

The current value of the rental property you own and the sum of money you wish to borrow will affect the offer you will receive. It is not uncommon for lenders to offer remortgages up to 80%, and some lenders may provide a higher offer.

As with homeowners remortgaging their property, landlords must place their finances in order before they apply. Buy to let mortgages are reviewed to a higher standard than residential mortgages, and this is the case for buy to let remortgages too.

Landlords should expect to be questioned in their rental income and to prove that even after the remortgage, they can afford the monthly payments. Each lender has its criteria, but it is not uncommon for lenders to request landlords receive an annual rent that is at least 125% of the yearly mortgage or remortgage payments.

There is no reason why landlords cannot remortgage their buy to let property. However, it is vital landlords approach the application in the manner they made their initial mortgage application.


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