Times are tough at the moment. This has led to a huge upswell in the amount of individuals seeking to access a little more capital by remortgaging their houses. With Brexit on the way, the financial security of the UK as well as private renters is somewhat in question. So, if this is something you’re considering, why not have a read of our handy little guide to remortgaging below.
Recent research by the BDRC has found that one third of buy-to-let landlords are seeking to remortgage their properties within the next year. Amongst landlords with multiple properties, a further 26% also state they intend to remortgage within 12 months. Similarly, a mere 12% of landlords stated that they would be buying new properties, giving a clear sign that remortgaging is, at the moment, the most favoured way to increase capital.
The most prominent factor that’s making remortgaging favourable are the highly competitive rates offered by mortgage providers and via online property agents. Within buy-to-let mortgages, most are interest-only, meaning borrowers only pay the interest and don’t have to make actual repayments. The Bank of England’s interest rates are currently only 0.75%, which are historically very low.
With Brexit approaching, there’s wide speculation that interest rates will rise. If leaving the EU goes smoothly, the Bank of England claims to expect rates to rise in order to meet inflation, with a target of around 2%. For the moment, though, nothing is certain.
Releasing Equity
Releasing equity is another prime factor for re-mortgaging. This is when a landlord re-mortgages their buy-to-let property to raise some capital by repaying the current mortgage and then putting the extra money aside. It’s also a popular way to pay back a current mortgage and find a new one with a lower interest rate.
Buying New Property
Amongst landlords looking to grow their portfolio, remortgaging certain properties and using the cash to buy new ones with the equity they’ve generated is proving popular, too. There are however, rules on the amount of buy-to-let properties anyone borrowing cash can own. Anther reason landlords tend to remortgage is to generate money for costly home improvements such as insulation, building an extension or attic room, or work on a property to make it concurrent with House in Multiple Occupancy (HMO) laws.
Current Buy-to-Let Mortgage Rates
According to Property Master, the majority of buy-to-let mortgage rates are still falling. The most notable of these are buy-to-let mortgage offering 50% loan to value (LTV). Conversely, five year buy-to-let mortgages offering 75% LTV actually rose in costs by around £29 per month. One reason for this is landlords could be finding the new regulations needed for a 75% LTV mortgage pricey.
With so much conflicting information around mortgage rates, it’s advised that landlords plan well in advance, ensuring they have all the paperwork necessary and are able to track the rise or fall of interest rates before jumping in with both feet – particularly whilst Brexit is still being worked out. It’s being heavily indicated that there will indeed be a remortgage boom within the next year, but so far the complications are as of yet uncharted, making communication with a mortgage advisor essential before committing.
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