Fixed-rate vs. adjustable-rate mortgages: which is right for you?
When it comes to securing a mortgage in the UK, one of the most significant decisions you’ll face is whether
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What is a buy-to-let remortgage?
A buy-to-let remortgage allows landlords to refinance their rental properties, often to secure better rates, release equity, or switch to a more suitable deal. While profits in the buy-to-let market slowed due to interest rate changes, recent trends have reignited interest in this investment avenue. Banks now often view buy-to-let clients as lower risk borrowers due to the consistent rental income backing repayments.
How do I find the best buy-to-let remortgage?
Finding the best buy-to-let remortgage requires careful consideration of your financial situation, property goals, and available deals. Unlike residential mortgages, buy-to-let remortgages are not regulated by the Financial Conduct Authority (FCA), giving lenders more flexibility in their offerings.
Lenders will evaluate your credit history to ensure you have a reliable repayment record. They will also review your financial commitments and rental income to assess your ability to cover repayments comfortably. Existing assets can work to your advantage, as they demonstrate financial stability. Although employment income is less critical for buy-to-let remortgages, it is still important to provide a clear picture of your financial situation. A thorough approach ensures you find a deal that supports your long-term investment goals.
Make your property work harder with a buy-to-let remortgage
Whether you're looking to boost rental income, release equity, or switch to a better deal, a buy-to-let remortgage could help you get more from your investment. With rates, fees, and criteria varying widely between lenders, comparing your options is key to finding the right deal for your portfolio.
At MoneySpider, we make it simple to compare buy-to-let remortgage quotes — quickly, clearly, and securely.
How much can I borrow with a buy-to-let remortgage?
The amount you can borrow for a buy-to-let remortgage depends on several factors. Lenders will consider the size of your deposit, which is a critical component in determining the loan-to-value ratio of your remortgage. They will also examine your financial history to assess risk, as well as any other assets you own, which can strengthen your application.
Unlike residential mortgages, buy-to-let borrowing does not hinge on your salary. Instead, lenders focus on the rental income generated by the property. Most lenders require the monthly rental income to be at least 125% of the mortgage repayments. Additionally, they evaluate the potential return on investment for the property, ensuring it meets their lending criteria.
How do I choose the right buy-to-let property?
Choosing the right buy-to-let property is a crucial step in ensuring the success of your investment. Consider the location carefully, focusing on areas with strong transport links, reputable schools, and desirable amenities. Think about your target tenant, such as families, professionals, or students, and choose a property that meets their specific needs.
It’s important to research the market thoroughly to understand rental yields, property affordability, and potential long-term growth. Consider how close you live to the property, as this will impact how easily you can handle maintenance and repairs. Your personal skills in managing these responsibilities should also play a role in your decision-making process. Most lenders require borrowers to be at least 25 years old, have a minimum income of £25,000, and limit their buy-to-let portfolio to a few properties. Taking the time to evaluate these factors will help you make informed decisions and maximise your investment returns.
What are the different types of mortgage
rates for buy-to-let?
Fixed-rate mortgages
Fixed-rate mortgages are ideal if you prefer stable monthly payments over a set term, while tracker mortgages follow the Bank of England’s base rate, offering potential savings when rates are low. However, when choosing a fixed rate, consider that early repayment charges may apply during the fixed period if you want to switch deals or pay off the mortgage early, and once your fixed term ends, you'll typically move onto your lender's standard variable rate unless you remortgage to a new deal.
Interest-only mortgages
Interest-only mortgages are particularly popular for buy-to-let properties. These allow borrowers to pay only the interest each month, keeping repayments low. Many interest-only deals also offer the flexibility to overpay up to 10% of the mortgage balance annually, helping you reduce the total debt faster if you choose. This structure provides a safety net for months when the property is vacant, ensuring you’re not overburdened with repayments during challenging times.
FAQ
Need more help?
How much deposit do I need?
Lenders on BTL mortgages normally like a minimum of 25% deposit. However, some of the best buy-to-let mortgage deals insist on 40%. This is why it is important when researching the best buy-to-let mortgages that all information is taken into account and time is given up to compare options, study quotes and be fully aware of what is on offer.
Are there additional costs?
When doing the maths for the BTL mortgage, consideration should also be given to the additional costs that come with BTL. Take into account building maintenance, repairs, building insurance, landlord insurance and content insurance. Also, even though the buyer will not be living in the property, if the property purchase price is high enough to warrant stamp duty, then this will have to be paid.
When is the best time to remortgage my buy-to-let property?
Start researching new deals 3-6 months before your current rate ends to avoid moving onto a higher standard variable rate (SVR). Consider remortgaging earlier if significant equity has built up or you find a deal that would offset any early repayment charges.
Will I need to prove rental income again when remortgaging?
Yes, lenders typically require current tenancy agreements and proof that rental income covers 125-145% of mortgage payments. Having a strong track record of rental payments and tenant occupancy can strengthen your application.
Can I release equity when remortgaging my buy-to-let?
Subject to the lender’s criteria, you can release equity if your property has increased in value or you’ve paid down the mortgage. The funds could be used for property improvements or deposits on additional investments, though higher loan-to-value ratios usually mean higher interest rates.
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