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How to Remortgage Buy to Let

Ashleigh Williams

Written by

11th Oct 2022 (Last updated on 26th Oct 2022) 8 minute read

If you’re a landlord with a Buy-to-Let mortgage, at some point you will likely need to remortgage. There are many reasons why a landlord may want to remortgage. This includes improving their mortgage rates or wanting to release equity from a property.

Regardless of the reason for remortgaging, it’s important to have a good understanding of the process. This enables you to organize your remortgage in good time.

In this article, we discuss how to remortgage a buy-to-let property.

This article will cover the following:
  1. What is Remortgaging?
  2. Can you Remortgage a Buy-to-let Property?
  3. How to Get a Buy-to-let Mortgage?
  4. How Soon Can You Remortgage?
  5. How Much Can You Borrow?
  6. Why Should I Remortgage a Buy-to-let?
  7. Frequently Asked Questions:

What is Remortgaging?

Remortgaging is when a homeowner switches from their existing mortgage to a new one. The mortgage is either transferred to a new lender or a new deal with an existing member. Once the remortgage has been approved, it will replace your previous one.

Can you Remortgage a Buy-to-let Property?

Yes, it’s possible to remortgage a buy-to-let property. In the majority of instances, there will be no issues in doing this.

If you have previously been accepted for a mortgage it places you in good stead to have a remortgage offer accepted. However, this is not always guaranteed, and there is an eligibility criterion you will need to meet.

For example, if you are in debt or your credit has decreased since you took out your initial mortgage, you may be declined the opportunity. This is because mortgage lenders may see you as a higher risk.

When you’re looking to remortgage a buy-to-let property, here are some aspects that lenders will take into consideration:

  • The success of the property
  • The income received from the property
  • Your credit score
  • The properties equity

Your eligibility may change based on the individual lender. This is why it’s important to do all you can to ensure your finances and paperwork are in order before applying for a remortgage.

Given that it can take a while to secure a new mortgage, it can be useful to look at remortgage deals in advance so you’re aware of the eligibility criteria.

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How to Get a Buy-to-let Mortgage?

The process of securing a buy-to-let mortgage is typically straightforward. Certain aspects can vary depending on the chosen lender. It’s important to check the process for each lender.

To begin with, you will want to begin looking for remortgage deals. You can do this individually, or you can seek help from a mortgage broker.

Choosing the right time to remortgage is important. It’s useful to look for deals around six months before your current mortgage ends to give yourself ample time to find the best deal for you.

To apply for a buy-to-let mortgage, it’s important to have all the correct documentation needed. This includes, but is not limited to:

  • Your current finances and credit history
  • The equity in the buy-to-let property
  • ID documentation
  • Proof of the income received from renting

How Soon Can You Remortgage?

On average, six months is the amount of time you will typically need to wait to remortgage. However, you will need to check your contract to confirm the exact date for your remortgage.

How soon you can remortgage a buy-to-let property will depend on many factors and the individual lender. The majority of lenders will have a set amount of time you are required to adhere to before you remortgage a buy-to-let property.

The length of time it takes to remortgage a buy-to-let property after submitting your application will vary. While some may take as little as three to four weeks, others may take up to eight weeks or longer.

How Much Can You Borrow?

When it comes to how much you can borrow, lenders will focus on aspects such as:

  • The amount of rental income you have
  • Your credit score and history
  • Current equity in the property
  • Any personal assets and capital gains
  • Some may consider the current tenants of the property too

Once you have provided this information, lenders are able to have a better understanding of your financial situation. This allows them to gain an idea of how much they are willing to lend.

There isn’t a set amount of money you can borrow when it comes to a Buy-to-Let remortgage. This is because it’s based on different factors, such as the equity in a property, and the amount you’re looking to borrow.

The money a lender will allow you to borrow is called the Loan to Value (LTV). The LTV is a percentage based on the value of the property and the equity it’s raised.

While the LTV could be 50% for one property, it could be as much as 80% for others. The rates are always based on each individual lender. As a result, there is no set number or LTV.

To find out how much you will likely be able to borrow you should speak to a mortgage broker to gain a better understanding of this. In addition to this, you will want to get in contact with a buy-to-let solicitor.

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Why Should I Remortgage a Buy-to-let?

There are many reasons why people choose to remortgage a buy-to-let.

Release equity for a deposit for another property

The great thing about remortgaging is that it allows a person to release the equity in the property. This can then be used to place a deposit on another property.

Equity is the money that’s built up for a property as it increases in value over time. An example of this is when a person purchased a property for £100,000. Over time, if the value of the property increases to £150,000 it has gained £50,000 in equity.

If the equity of the home is high enough, it can be used to buy another property. This is a common reason why people will consider remortgaging a property.

Converting buy-to-let to a normal mortgage

In some instances, landlords may choose to remortgage their buy-to-let property to move into the property. To do this, they will need to remortgage to a residential mortgage. You legally cannot live in a buy-to-let property.

Getting a Better Mortgage Deal

Another common reason why people remortgage their buy-to-let property is to receive a better mortgage deal. When it comes to fixed-rate mortgages, they are only fixed for a set number of years.

When this period ends, the person will automatically begin to pay the lender’s standard variable rate (SVR). The SVR tends to be more expensive than a fixed mortgage rate and often has higher interest rates. By choosing to remortgage, a person is typically able to find a less expensive option.

Improvements to the property

Upkeeping a Buy-to-let property can be quite expensive. As with any property, over time it will be subject to repairs and may need renovating. If you need to replace aspects such as the roof, a bathroom or a kitchen, you will need to finance this.

If you don’t have the available funds, it can be possible to remortgage to release some equity in the property. You can then use this equity to make the necessary improvements.

It’s not a guarantee that your remortgage will be accepted on these grounds. However, renovations and improvements are often favoured by lenders. It can potentially help to increase the value of the home in the long run. This is positive for the lender and landlord.

Why Could I Be Denied a Buy-to-let remortgage?

When applying for a remortgage, even if you follow the correct steps, it’s never guaranteed. In some instances, your remortgage may be denied. Here are some reasons why this may happen:

Your Credit Score and Finances

If you have bad credit and are currently in debt, this can affect your ability to be accepted for a remortgage. While you may have had good credit when you were accepted for your initial mortgage, your finances will be looked at again when remortgaging.

A lender needs to be confident in your ability to carry out repayments. Even so, if some lenders deny your remortgage request, another lender may be willing to let you borrow money.

The Lease of the Property

If you own a leasehold property, and the lease is shorter than 80 years, this can potentially affect your ability to remortgage. It’s important to speak to a mortgage advisor about this.

The Type of Property and Tenants

Some lenders can be quite strict when it comes to the type of property you want to remortgage. Some lenders will also take into consideration the tenants living at the property.

Age

If you’re over the age of 60, it can be more difficult to secure a remortgage due to your age. Even so, it’s not impossible, but there will be fewer lenders available offering this.

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Frequently Asked Questions:

Can I Remortgage a Residential Mortgage to Buy-to-Let?

Yes, in the majority of instances, it’s entirely possible to remortgage a residential mortgage to a buy-to-let. However, your lender will need to feel comfortable doing this. There are a handful of aspects lenders will tend to take into consideration. This could include:

  • Where you will live
  • The mortgage type
  • The type of property
  • The amount of rent you will gain

A lender will likely assess the reasons why you’re looking to change your type of mortgage, and whether they think your situation is suited to this.

How do I remortgage residential buy-to-let?

To begin the remortgage process from a residential mortgage to a buy-to-let mortgage, you need to contact your mortgage lender. They can then assess whether you meet the requirements of being able to change your mortgage type.

After assessing your finances, credit and how you’re planning to use the property, they can then come to a decision based on this. If your mortgage lender doesn’t approve this, it can be possible to remortgage with a new lender that will. However, you will need to speak to the individual lenders and potentially a mortgage broker to begin this process.

Can I remortgage my buy-to-let to release equity?

Yes, it can be possible to remortgage your buy-to-let property to release equity. This is the reason why many people choose to remortgage in general.

For more buy-to-let mortgage tips, read our buy-to-let property advice.

Disclaimer

All data, research, facts, and figures have been taken from reputable sources and government data that was accurate at the time of writing. Any information featured in this guide should not be relied on or regarded as an authoritative statement of law. While we aim to ensure that all information is accurate, we make no representations about the suitability or reliability with respect to the website as well as any products, information, or services that are featured on the website. Mortgage criteria, policies, and interest rates change regularly and vary depending on the lender and type of mortgage you have. You should speak directly to your mortgage lender for clarification. It should be noted that your home may be repossessed if you cannot keep up with your mortgage payments.
Ashleigh Williams

Having written book reviews and content for For The Love of Books for over five years, Ashleigh now creates advice articles for Compare My Move, focusing on all things home-related.

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