Buy to Let Remortgage

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Buy to Let Remortgage

Buy to Let Remortgage

Hemat Natha talks us through remortgaging a Buy to Let property.

Can you remortgage on a Buy to Let and why would you?

Obviously yes, we can. The real question is why would you remortgage? A remortgage is moving your mortgage from one provider to another. There’s got to be a reason why we do that.

When someone comes to us about a remortgage we will always ask them why. Customers have Buy to Let mortgages with us and when their rate comes up for renewal, we proactively contact them around six months in advance.

We ask a few questions about what you want to do with the Buy to Let mortgage. Do you want to raise any further money for another purpose? Do you want to expand your portfolio? I’d say that 7 out of 10 times people don’t want to do anything other than make sure that they are on the most suitable rate.

We check what your existing provider will give you as a rate and compare that with the market. We take into consideration your circumstances for example, how many Buy to Lets you have. We also look at the rental stress test.

We’ll present any cost savings and if it’s significant enough – perhaps over £1,000, depending on the individual – you might decide to leave your existing lender and move to another one.

We’ll get the remortgage ready to go as soon as your rate is due to expire. We go through a standard process to confirm your eligibility before we give any rates out. People come to us having seen rates of 3.99% on the internet, but the internet doesn’t advise or talk back to you. It doesn’t know that you have five other properties or you’re a higher rate taxpayer.

How do I remortgage a Buy to Let?

Start early. Also, Buy to Let has become very complex since changes to the tax regime and lenders increasing their stress test ratios. There are different rules for a high rate taxpayer and a low rate taxpayer.

Some people own Buy to Lets in limited companies. Plus, we need to think about whether a two year rate is preferable to a five-year rate or not. We need to do checks on your portfolio before we can recommend a remortgage.

We ask for quite a lot of information to do those checks. So contact us, let us understand your circumstances and we will then send out a list of documents that we will need. We’ll do some research then present our findings. Then you can come to a decision about whether it’s best to remortgage or not.

Some lenders will allow certain types of additional borrowing and some won’t – these are the things we’ll confirm before recommending a mortgage.

Can I be refused a Buy to Let remortgage?

You can be refused a Buy to Let mortgage, but we are not often refused because we ask for so much information up front and do so much research. We wouldn’t place a Buy to Let remortgage with a provider that might refuse you.

If there is a problem, it’s usually where someone’s given us a figure for the market rent, but the valuer doesn’t agree that rental can be achieved on the open market. It’s frustrating for us because we’re relying on the surveyor’s opinion to make the deal work – a rental has to come in at a certain level.

In that case we almost have to start again. But we do as many checks as possible. We require your tenancy agreement and do a sense check on the rate. We ask our applicants if they are achieving the market rent. If not, we look at what the potential could be and source a lender to take the potential market rent into account instead of the actual rent received.

We have software to check the property valuations and we sense-check that. When you’re borrowing additional funds and depending on that Loan to Value it can be really important. It’s the main reason for refusal – but fortunately with the research we do, declines are pretty rare.

How long does it take to remortgage your Buy to Let?

How long is a piece of string! The main factors are how responsive you are to the information we request. We do our research and have a meeting to discuss the options. Then, we rely on the application processing times of the lender.

Timescales can vary a lot. Some lenders can do things within two days and some take 13 or 14 days. One lender at the moment takes 13 days to even assess an application.

But if there’s pressure to get the remortgage done quickly, obviously we would look at timescales, costs and present those before we progress.

Remortgaging involves a conveyancer, so you need to appoint one to redeem one mortgage and secure the new mortgage. That does take time, so we can recommend solicitors and help with the paperwork. We do as much as possible to remove the hassle from the process.

So while it could just be a week to get the mortgage off, it’s then a couple of weeks to get the legals sorted – or longer. We’re waiting on valuations and for lenders to assess documents. Generally we keep everyone updated on how the process is going.

It’s simpler when you start early as there isn’t so much pressure. But if your rate is coming up for renewal at the end of the month, there’s a lot of pressure to hit the milestones. So give us at least four weeks – don’t leave it to the last minute.

Speak To An Expert

It doesn’t cost anything for a chat, it’s free and we never charge a fee until we’ve got a mortgage offer. So pick up the phone and let us take it from there.

What costs are involved with remortgaging your Buy to Let?

You may have a valuation cost or the deal we recommend may have free valuation. There are arrangement fees or product fees, as well. You can either pay them up front or add them to the loan. There may also be a cost involved with the solicitors – while some providers provide free legals.

There are also little costs like transfer fees and release fees – but your conveyancers should be able to quote for that. There also may be a broker arrangement fee. Some brokers charge for advising on the Buy to Let remortgage.

Do you have to pay stamp duty when remortgaging a Buy to Let?

Stamp duty is always paid on the purchase of a Buy to Let. So when you’re remortgaging there is no stamp duty cost. Stamp duty may become involved if you’re doing something quirky. Perhaps you’re removing one party off the property and another party is coming onto the property – in that case, they’ve got to pay stamp duty on their share.

We’re not tax advisors or not licensed conveyancers. We will give you a rough estimate on that cost but you’ll have to confirm with your solicitor.

Stamp duty may also be applicable where you own the Buy to Let in your own name and you’re selling to a new Buy to Let limited company. That’s usually done to save tax – so get good tax advice up front. It depends on your personal circumstances whether selling your Buy to Let into a limited company is the right decision.

What are the benefits of remortgaging a Buy to Let property?

Remortgaging a Buy to Let could save you money on the monthly payment. It can allow change of ownership more freely. A different provider may also allow you to borrow the amount of money you need for a certain purpose.

We will understand your circumstances and recommend the most suitable approach to achieve your plans. There are a few benefits there.

What else do we need to know about a Buy to Let remortgage?

The main thing is to get in touch with us early. A good advisor will sit you down and understand your circumstances and what you want to achieve from your investment property.

That’s just so that we can advise you properly and accurately. It’s not just about getting you a mortgage – it’s about making sure you’ve got the right advice.

We make sure you have considered all your options depending on your long-term ambitions with this investment property. It may be that after our conversations and research we don’t do anything – but if that’s right for you, it’s right for us. We will also ask you to speak to tax experts if that’s relevant. You need to speak to the professionals to make the right decisions.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments.

You may have to pay an early repayment charge to your existing lender if you remortgage.

The Financial Conduct Authority does not regulate most Buy to Let Mortgages.

A fee for our service is charged. This is typically £495 but the exact amount will be dependent upon your circumstances and we will discuss this with you.

Why us?

Our Approach

Personalised – there is no ‘one size fits all’ when it comes to property advice. Your needs are not the same as anyone else’s and nor is our advice. We spend time getting to know you and your motivation for purchasing a property. 

Choice – we’re a mortgage broker, so we have the widest possible range of options. 

Technology and expertise – we use a combination of cutting-edge tech and 35 years of good old-fashioned financial expertise to find the right loan for your circumstances. 

Efficient – we admit it, we’re a little bit obsessed with streamlining. Our inspiration is Formula One – did you know that in 1950 a pitstop took 67 seconds? Today it takes 2. The difference? Organisation, training, and tools. We’ve learned from that and have streamlined our processes to get you into your property faster and hassle-free. Our case studies speak for ourselves!