Buy to Let Remortgage
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Buy to Let Remortgage
Jess Phillips explains how remortgaging a Buy to Let property works.
Can you remortgage on a Buy to Let?
Yes, remortgaging a Buy to Let property is common practice and would involve applying for a mortgage with a new lender to repay your existing mortgage. Another option is securing a new rate with your current lender, which we can compare for you. That’s called a product transfer.
Why remortgage your Buy to Let?
You don’t have to remortgage your Buy to Let. However, if you simply let the mortgage revert to the lender’s standard variable rate, which is typically much higher, the borrowing cost would increase. By remortgaging, you’re securing a new rate and potentially saving yourself a considerable amount of money over a long period of time.
How do I remortgage a Buy to Let? What is the process?
Firstly, we would complete a mortgage fact-find with the client to establish their personal circumstances, priorities and objectives. Following the fact-find, we request basic customer documents to verify identity and income, and we’re then able to research the most suitable mortgage option for their needs.
Once this has been discussed, we can secure a Decision in Principle with the recommended lender. If accepted, we can submit the application to the lender for you to secure the new product rate. Once approved, a mortgage offer will be issued and the solicitors would be instructed to complete the required legal work.
The legal process for a remortgage is less complex than a purchase and usually takes a month or two to complete. Completion is set for the day after your existing product ends with your current lender, to avoid any early repayment charges.
Can I be refused a Buy to Let remortgage?
It’s not beyond the realms of possibility. However, gathering all the facts about yourself and the property, enables us to recommend a lender that can consider your personal circumstances.
A Decision in Principle would be secured prior to applying, which ensures that you pass the initial credit check prior to submission, and will reduce the chances of being declined.
How long does it take to remortgage a Buy to Let?
I’ve seen a remortgage go through in a little as two weeks. That said, it’s not advisable to leave it that late, as it can take much longer if there are unexpected delays.
A general rule of thumb is to begin the remortgage process four to six months prior to your current rate ending. This leaves ample time to obtain the mortgage offer and have the required legal work ready for completion.
Mortgage offers are normally valid between three to six months, depending on the lender, which the advisor will be able to check for you.
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What costs are involved with a Buy to Let remortgage?
Generally for a Buy to Let remortgage we would expect to pay a broker fee, possibly valuation fees, legal fees and a product fee to the lender. Some lenders do offer fee-assisted or free legal incentives with their products and also free valuations.
Fees do differ between properties owned in personal name or in a limited company name, with some higher costs expected for limited company transactions.
Do you have to pay stamp duty when remortgaging a Buy to Let?
Unless there is a transfer of equity taking place, where another party is being added to the new mortgage and deeds, no additional stamp duty should be applicable.
In the event that a transfer of equity is involved as part of the remortgage, stamp duty could be payable, depending on the ownership changing hands. Always consult your solicitor – they will be able to confirm if stamp duty is due in these instances.
What are the benefits of remortgaging a Buy to Let property?
Some of the benefits of remortgaging a Buy to Let include not reverting onto your existing lender’s standard variable rate, which is usually much higher. So you could save some money.
You may potentially get a lower interest rate on the new product compared to your existing one, subject to the market conditions at the time. You will also have greater choice compared to only considering rates from your current lender’s product range. There’s also the ability to capital raise if needed.
How can a mortgage broker help here? Is there anything else we need to know?
A good mortgage broker will be able to recommend the most suitable product and lender for your circumstances. This saves you time searching around, hoping that lenders are able to accept you and lend the required amount.
A broker would carry out all of these checks prior to submission, increasing the likelihood of being accepted, whilst hopefully saving you money at the same time. We may have access to certain products and lenders that are not available on the open market or direct, which again could have a positive impact.
I would suggest reaching out six months before your mortgage rate ends. We can start looking into the right options for you so you’ll know exactly where you stand.
Your home/property may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
The Financial Conduct Authority does not regulate some forms of Buy to Let Mortgage.
There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £99 to £549, and this will be discussed and agreed with you at the earliest opportunity.
Asset Harbour Mortgage & Protection Ltd trading as Asset Harbour Mortgage & Protection are an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.
