4 Simple Reasons You Should Consider a Remortgage For Your Buy To Let Property

When you own a buy to let property, your property is not just an asset or an investment, it’s a business. And it is of utmost importance to ensure that your business expenses are in order and that you’re not paying over the odds for anything.

One of the biggest expenses as a landlord of a buy to let property will be your mortgage, so it may be worth checking the marketplace to see if a remortgage can save you money on your monthly expenses. What are the reasons for remortgaging your buy to let?

Get a lower interest rate: One of the most popular reasons why landlords remortgage their investment properties is simply to secure a better interest rate on their borrowing.  If your original buy to let deal has ended you could switch to a preferential rate with another provider rather than remaining on your lender’s standard variable rate (SVR).

Lenders often offer excellent incentives and deals to encourage you to remortgage.  For example, you may be able to benefit from a discounted or tracker rate or perhaps you could fix your repayments for a number of years?  And, by reducing the interest rate that you pay it will help you reduce your outgoings and generate more net rental income.

Release equity from your properties: Remortgaging also allows you to release equity that may be tied up in your investment property.  Depending on the rental income and the amount of equity you have in your property you may be able to raise a cash lump sum when you remortgage.  As long as the repayments remain affordable and you fir a lender’s loan to value (LTV) criteria you can often raise capital through a remortgage.

Remortgaging and releasing equity from your property can allow you to raise capital to purchase further investment properties. Your existing property becomes the security for cash to use as the deposits for additional purchases. This allows you to build up your property portfolio, increasing your rental returns and spreading your risk.

Convert the mortgage to a repayment basis: It is quite possible that you took out your buy to let mortgages on an ‘interest only’ basis rather than on a capital and interest (repayment) basis.  Many mortgages have been arranged on this basis in order to keep the monthly repayments as low as possible.

Remortgaging allows you to make changes to your home loan arrangements such as converting the mortgage from an interest only basis to a capital and interest (repayment) basis.  This will ensure that the balance of your mortgage decreases over time and so you will ultimately own the property outright at the end of the term.  Bear in mind that this will increase your monthly repayment.

Avoid selling the property: A remortgage can also help you avoid selling your property if you are in need of some extra cash.  If you need access to some of the equity in your buy to let property – for example to buy another property or for home improvements – a remortgage will help you access cash without the need to sell the asset.

If you decide to sell your property you will have Capital Gains Tax to pay. Either that or you might have to sell in during a market downturn. A better option would be to remortgage your buy to let property; this can help you raise the funds you need without being forced to offload property that may be your key to future prosperity.

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