A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Before making the decision to remortgage your property, it is important to thoroughly think about all aspects of the situation.
Many Buy to Let landlords are remortgaging their property portfolio due to new legislation causing fading profit margins and accumulated debts. Although remortgaging may be a short-term solution, the market’s unpredictability could result in more problems later on. If your mortgage is up for renewal, you might need a new deal. If you want to borrow more money, remortgaging your Buy-to-Let property before your current deal ends could be worth it, even if there are early repayment charges. With new rules and rates, this move could help you capitalize on a better deal overall.
Refinancing your residential property to purchase a buy-to-let investment can be an excellent way to diversify your assets and generate additional income.
The tax implications of buying a rental property.
In April 2017, the government imposed taxes on money that landlords have to pay their lenders. This has cut into profits and forced many Buy-to-Let landlords to lose money. Many landlords feel as though Buy-to-Let property has been targeted unfairly. With the amount of rent they must earn in order to cover their mortgage increasing from 125 per cent to 145 per cent, they are left feeling hard done by. landlords are now looking to remortgage their properties so they can get a better rate. If you’re wanting to remortgage your Buy-to-Let property, but not necessarily borrow more money, some lenders may make exceptions for a sweeter deal–although it’s unlikely given that not many of them see the value in it.
The Question of Buy-to-Let
Those who own properties for the purpose of renting them out could be in trouble and feeling stuck, because of recent tax increases on these types of properties. They’re debating whether it’s better to sell now and give up or wait patiently for the market conditions to improve again. The best course of action is to seek professional help and get a second opinion from someone with expertise. As mortgage brokers, we at Your Mortgage Experts offer this service for free and would be more than happy to answer any questions you may have) so that you can make an informed decision based on your specific situation.
What’s Next for Buy-to-Let Landlords?
Many Buy to Let landlords are also homeowners. Since it is tricky to secure a buy to Let mortgage without a residential one, those who want developed portfolios usually purchase their own homes first. What we’re seeing now, however, is that some landlords remortgage their homes in order to gain funds and pay off any growing Buy to Let debt they may have. While this is an option, it’s not ideal for anyone wanting to run a successful business. After the most recent set of rules was put into place, some lenders now want landlords to take rent that is more relative to their mortgage costs. This puts an increased financial burden on the landlord and decreases their potential profit margins. This presents an issue for those who want to remortgage because some landlords will look to lower the size of their mortgage. By doing so, they can afford to remortgage and pay a smaller rate. A reduced mortgage also results in less interest paid overall, which is favourable for individuals with Buy to Let properties.
Our advisors can help clear up any confusion you have about Buy- to – Let remortgages.
Luca BertolinoMortgage Expert
Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.