So, you have an established buy to let property with a mortgage…now what? There are various points in your buy to let lifecycle where you may want to consider remortgaging. Nick Helm, buy to let specialist, explains the various reasons for remortgaging your property.
There are several reasons why you might want to consider remortgaging your existing buy to let property….
1) The existing fixed rate period has or will soon expire, and the interest rate is about to revert to the lender’s standard variable rate.
In most cases, if you don’t take any action, this will mean a significant jump in your monthly repayments and if you do nothing, lenders will only get richer at your expense. We can help you look around the market for a better deal with a different provider, or talk with the existing lender and see what they will be able to offer you in terms of a ‘loyalty’ product to keep you as an existing customer. This will be the easiest option as there is usually no new assessment of your financial circumstances. A ‘Product Transfer’, as it is known, can usually be arranged within a day or two to coincide with the end of the existing fixed rate period.
2) For those that have seen an increase in the value of their property, you may want to withdraw some of the equity to perhaps buy a further property or make property improvements.
This will usually mean looking for a new lender for the entire borrowing, although in some cases the existing lender may offer a ‘Further Advance’ facility which would require a fresh assessment of your finances.
3) Perhaps your existing mortgage is nearing the end of the original 25-year term and the lender is now looking for full repayment of the entire borrowing.
The good news here is that we have access to many lenders that have now recognised your buy to let property is being held for investment purposes and doesn’t need to be repaid by retirement age. Therefore, the upper age criteria have been extended by many to repayment by age 85 and in some cases even well beyond this!
4) The original property purchase may have been made in personal name(s) and you may now wish to move the borrowing into the name of a limited company for tax reasons.
Do remember that this is not considered a remortgage as such, but will be treated by the lender and HMRC as a sale and then a purchase by the company. This may trigger capital gains tax and additional stamp duty considerations. We always recommend that you take appropriate professional advice before making any decisions.
As always it pays to speak to a broker such as ourselves to discuss your circumstances and requirements. Contact me on firstname.lastname@example.org or call me on 01732 471608, to see how remortgaging can save you money.