How To Remortgage A Buy To Let Property

If you own a buy-to-let property, you might be wondering when it's the right time to remortgage. Consider releasing some equity for further property investments or finding a better deal.  We look at why you might want to remortgage a buy-to-let property (BTL), what considerations you need to make, and how a remortgage broker can provide invaluable assistance.

In this guide:

• Is it possible to remortgage a buy-to-let property?

• What are the benefits of remortgaging a buy-to-let?

• Remortgage when your current BTL deal is ending

• Get better BTL rates by remortgaging

• Changing my buy-to-let mortgage to a residential mortgage

• Equity release by remortgaging a buy-to-let

• Buying to let remortgaging eligibility criteria

• When I live abroad, can I remortgage my buy-to-let property?

• Remortgaging to buy to let: How to get the best deal

Is it possible to remortgage a buy-to-let property?

The answer is yes, you can remortgage your buy-to-let property if you want to get better rates, raise capital for your property portfolio, or to move back into the property you once rented.

Getting the best buy-to-let remortgage deal, however, depends on your individual circumstances. A number of factors will be considered by mortgage lenders when considering buy-to-let properties, which we will discuss later, but most importantly, they will want to know why you wish to remortgage.

Why should I remortgage my buy-to-let property?

Your reasons for remortgaging a buy-to-let property can affect what lenders and deals you qualify for. In this section, we'll discuss eligibility criteria, as well as how the purpose of your remortgage may affect the products you can access.

Remortgage when your current BTL deal is ending

To avoid being switched to your lender's standard variable rate (SVR), remortgaging is an excellent idea if your current buy-to-let mortgage is within six months of ending.

Get better BTL rates by remortgaging

The market may also offer you better buy-to-let remortgage rates if you remortgage.

Remortgaging is always a good idea when your current fixed rate or tracker mortgage is about to expire. Brokers often have access to the best lenders and deals.

Change my buy to let mortgage to residential

To convert your buy to let mortgage into a residential mortgage, you will need to remortgage a property you once rented out.

The best way to obtain a residential mortgage is to speak with your existing lender about switching you to a residential product, or you can remortgage to find a better deal.

Switching from a buy-to-let mortgage to a residential mortgage usually involves fees, even if you stick with your current lender. 

Equity release by remortgaging a buy-to-let

If you have built up equity in your buy-to-let property over the years, you can release it. If you intend to use this capital for a specific purpose, your ability to borrow money and find a willing lender may be affected.

Listed below are some common scenarios for remortgaging a buy-to-let property to unlock capital and how lenders may view your application.

Grow your BTL portfolio by releasing equity

A landlord may remortgage a buy to let (BTL) property to release equity for a deposit or part purchase of another BTL property. You should be aware, however, that you may not be able to remortgage a current BTL property in order to grow your portfolio.

BTL portfolios are frequently limited to a certain number of properties by lenders in order to limit risk. The BTL stress test will also be applied to calculate your repayment ability, as with any BTL mortgage. In order to determine your affordability, lenders use the stress income cover ratio (SICR) to compare the amount you want to borrow with the rental income you will receive and the interest you will pay.

The BTL stress test will also be affected by your tax status. To prove affordability, higher rate taxpayers must have more rental income than low rate payers. 

To assess your options, and be matched with the lender most likely to approve your remortgage application, talk to a specialist BTL remortgage broker.

To fund repairs or improvements to BTL properties, release equity

When you remortgage your buy to let property, you can release equity for much-needed repairs and upgrades. In order to make these improvements possible, many lenders are more than willing to allow you to refinance. 

Consolidate your debt by releasing equity from your BTL

You can remortgage your buy to let property to consolidate your debts and reduce your monthly expenses.

As long as you can prove affordability, you may be able to do this with a specialist lender.

Remortgage eligibility criteria for buy-to-let properties

Remortgaging a buy-to-let property is treated the same way as remortgaging a primary residence. If you meet the following criteria, regardless of why you are remortgaging and even if you stay with your current lender, you will have a better chance of being approved.

Requirements for deposits and loan-to-value

A buy-to-let mortgage typically requires a larger deposit than a residential mortgage. An 80% loan-to-value (LTV) ratio is typical for a buy-to-let mortgage. Under the right circumstances, specialist lenders may offer 85% and up to 90%.

You are more likely to get the best BTL remortgage rate if your LTV is low.

Affordability and income

Remortgaging shouldn't be a problem if your circumstances haven't changed since you took out your buy to let mortgage - especially if you go through your current lender. It will be necessary to pass strict income and affordability checks if your situation has changed or if you're remortgaging through a new lender.

Rental income is typically required to cover a BTL mortgage by 125-145%. You should remember that not all lenders are the same and have different criteria for determining how much they can lend.

What has been the success of your rental property so far?

Your remortgage application will be more likely to be approved if you can demonstrate reliable rental income to date. To ensure you get the best rates, you should also consider what type of tenant you can attract - certain lenders consider sitting tenants or students less desirable.

Your property's current market value

Make sure you have a realistic view of the value of your buy-to-let property. Don't rely on guesswork if it has gone up in value. 

Credit History

There are still remortgage deals available for BTL properties with deteriorating credit profiles today, but expect to pay higher rates if you need to refinance.

With the help of a specialist broker, you can still find BTL remortgage finance despite bad credit.

If I live abroad, can I remortgage a buy-to-let property?

When you're living overseas, you can remortgage your BTL property. As a UK expat, you have a harder time obtaining a BTL mortgage since lenders consider you a higher risk. Your employment status may not be easy to prove, and foreign income is often not accepted as proof of earnings. Broker intermediaries offer access to a growing number of specialist lenders.

Talk to one of our experts about BTL mortgages if you have recently moved abroad or are having trouble remortgaging your UK BTL property.