The reason why many Buy to Let landlords are looking to remortgage their property portfolio is down to new legislation that has seen profit margins fade and debts accumulate. Remortgaging may be a short-term solution but the unpredictability of the market may leave landlords with a sore head further down the line. It may be that your mortgage is up for renewal and you require a new deal. However, it could also be worth remortgaging your Buy to Let property before your current deal ends and paying the early repayment charges, in order to capitalise on new rules and rates, especially if you want to borrow more money.
In April 2017 tax rates were imposed upon the money that landlords have to pay their lenders. Ultimately, this has cut profits and forced many Buy to Let landlords to make a loss. Many landlords feel as though Buy to Let property has been targeted. With the amount landlords must earn in rent to cover their mortgage increasing from 125 per cent to 145 per cent, many are left feeling hard done to. This is why landlords are now looking to remortgage their properties, to secure a better rate, even if it means paying early repayment charges. If you are looking to remortgage your Buy to Let property, but not in terms of borrowing more money, exceptions may be made for a better deal but it’s unlikely as not many lenders see this as beneficial.
Buy to Let landlords could be in hot water and facing a quandary, due to recent tax implications on properties. The question they’re toying with is: should they sell up and give up or wait it out and hope for the market to swing back around? The best thing to do is seek professional advice and review your property portfolio. As a mortgage broker, MortgageKey offer free & friendly advice ahead of any mortgage decision. From here, you can weigh up your options and make a decision based on your individual circumstance.
As you well know, most Buy to Let landlords are homeowners too. It’s tricky to secure a buy to Let property without a residential mortgage, so property tycoons tend buy their own home before developing their portfolio. However, what’s coming to light now is that some landlords are remortgaging their own homes to release funds, enabling them to pay off any mounting Buy to Let debt. This is an option but not an ideal one for any business man or woman. Some landlords will currently have mortgages, that under the most recent rules, they will no longer able to afford. Lenders now insist that landlords take rent more relative to their mortgage costs, (which are now at a higher rate) reducing their margins. This could prove a problem for those wanting to remortgage. So, some landlords will be looking to reduce the size of their mortgages, so that they can afford to remortgage and pay lower rates. A smaller mortgage should mean a better rate and less interest to pay overall, which is the ideal scenario for those concerned about the continuation of their Buy to Let portfolio.
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Representative Example: Annual Interest rate of 2.44% fixed for 2 Years followed by 3.59% for the remaining term. Representative 3.50% APRC Variable. Based on borrowing of 150,000 over 17 years repayments of £899 per month. Total amount repayable £198,466. Includes Lender Fee of £995 and Broker Fee of £695.