Buy to let remortgage
Published 16th August 2017
Remortgaging a buy to let can be straightforward for most customers, but for others it can be more difficult, especially if things have changed drastically since the first mortgage was arranged. For the best buy to let remortgage deals search through our best buy tables below. For further information and advice read on…
Why remortgage your buy to let?
There’s loads of reasons why a borrower would want to remortgage buy to let property, whether that’s to…
- Raise money from your exisitng property
- Swap your mortgage for the best rates
- Change the terms of the mortgage.
Whatever the situation there are usually several options.
Rates can make a huge difference when it comes to the amount you pay on the mortgage and ultimately, the amount of return you get on your investment. If you have finished your fixed or tracker initial rate period, you may find yourself on your lenders standard variable rate (SVR), which can usually be anywhere from 4% up to 6%.
Example: If you have a £100k interest only mortgage on a SVR of 5.25% your monthly payments are likely to be around £438pm. At 75% Loan to value (LTV) it may be possible to get buy to let remortgage deals at say 3.9%, thus lowering your interest by 1.35%, which is £325pm, reducing your monthly payments by £113pm, that’s £1356 a year!!!
Getting the best buy to let remortgage deals
Buy to let remortgage rates tend to be higher than those for main residential mortgages, and lenders would say that this is because of the increased risk of the loan defaulting should the tenants not pay their rent and the borrower not be able to keep up with payments. Having said that, there are still some great rates available which is why many landlords are remortgaging at the moment.
Remember though, it doesn’t just come down to rate.
The best buy to let remortgage deals are those that have the best overall cost. This includes the rate and associated mortgage fee’s. For most people, there’s little point in having an amazing rate if it costs tens of thousands to set up. There’s a balance to it, and it ultimately depends on the size of the mortgage you are taking. For instance,
Product A = 2yr fixed rate at 3% with £1000 in fees,
Product B = 2yr fixed rate at 3.5% with £99 in fees,
Which is the best deal to take out?
For a mortgage of £105,000…
105k + 1kfee @3% = 265pm Approx. total cost = £7,360
105k + 99 fee @ 3.5% = 307pm Approx. total cost = £7,467
Savings made by taking the lower rate with higher fee = £107
If the mortgage was under 105k then it will most likely be best to take the mortgage with lower fee. Conversely as the loan amount increases higher, the savings made with the lower rate and higher fee increase dramatically.
For a mortgage of £200,000…
200k + 1kfee @ 3% = 503pm, Approx total cost = £13,072
200k + 99fee @ 3.5% = 584pm, Approx total cost = £14,115
Savings made by taking the lower rate with higher fee = £1,043
For buy to let mortgage advice get in touch now and an expert will talk through with you what you need to know, or take care of everything for you if that’s what you’d prefer!
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