Remortgaging a Buy-to-Let property

In the current economic climate of record-high inflation, increasing base rates and escalating living costs, landlords looking to reduce overheads, raise capital to expand their property portfolio or carry out renovations, should consider remortgaging a Buy-to-Let property as a possibility in order to help them achieve their goals.

Do I need to remortgage my rental property?

It’s advisable business practice for landlords to review their financials to ensure they are getting the best rate on their buy-to-let mortgage. However, considering the rumours of future rate rises and increasing inflation, this has now become more important than ever.

Although most buy-to-let mortgages are often interest-only rather than capital repayment, remortgaging still provides landlords with the best opportunity to lock in a lower rate, which could help them save money in the long term as well as during this period of uncertainty.

The benefits of remortgaging a Buy-to-Let property

One of the most common reasons for remortgaging a buy-to-let property is to release equity from one property to buy another. This is worth considering if you are an existing landlord as according to reports from the ONS, house prices in the UK rose by an average of 9.8% in the year to March 2022 with rent prices now reportedly 15% higher than when the pandemic began back in Q1 2020.

The national average asking rents outside of London reached a new record in Q1 2022 of £1,088 pcm, rising from £982 pcm last year. The asking rent of properties in London has also reached new levels. Last year, the average asking rent for properties in the capital was £1,919 pcm. This year, it has grown by 3% reaching a record-breaking high of £2,193 pcm.

Release equity for a deposit on a new Buy-to-Let property

For those landlords looking to expand their property portfolio, remortgaging will enable them to raise capital by repaying their current mortgage and using the equity gained from the rise in property value to use as a deposit on a new buy-to-let.

With tenant demand up by 6% and available rental properties down by 50% compared to the previous year, now is the time to consider expanding your property portfolio and generating additional income.

EPC regulations for UK landlords and home improvements costs

The Energy Performance Certificate (EPC) regulations deadline is fast approaching, and remortgaging a buy-to-let could help landlords release equity to carry out necessary renovations. The new rules require all rental properties to have an EPC rating of C or above for new tenancies in 2025, before extending to include all tenancies by 2028.

By remortgaging to release equity to carry out any major refurbishment work to meet the soon-to-be-implemented regulations, landlords are more likely to safeguard their future rental income while simultaneously increasing the value of their properties and their attractiveness to tenants.

Debt consolidation and property sole ownership

Landlords can also use the equity released through remortgaging to buy out a business partner or joint-landlord with whom they may have initially purchased the property and go it alone. It can also be used to consolidate and settle any accrued debt, as the low rate on a remortgage versus the interest on any outstanding loans means remortgaging could  more than likely save money in the long term.

Speak to a free Mortgage Broker

As with all financial decisions, speaking to a mortgage broker is always advisable before taking any action. Landlords looking to remortgage should also make sure they plan in advance and enjoy a stress-free process by contacting a free mortgage broker who will manage the remortgage process from start to finish.

Providing our clients with the best possible service is at the heart of what we do, we are completely independent with access to over 70 different lenders ranging from high-street banks to more specialist lenders. Visionary Finance is a free mortgage broker based in Milton Keynes. We do not charge any of our UK clients a broker fee.