Why are more landlords looking to remortgage?

31 October 2019 2117 Views

As a landlord, it helps to understand current trends in the private rented sector and how you can maintain your buy-to-let investment.

Recently, it was revealed that 53% of buy-to-let landlords intend to remortgage in the next year as an individual, while 19% plan to do so within a limited company and 17% said it would depend on their circumstances at the time.

The survey, undertaken by BDRC on behalf of Foundation Home Loans, found that landlords with 11-plus properties were much more likely to remortgage within a limited company structure, with just over a quarter (26%) saying they would do so within the next year.

What’s more, just 14% of landlords are currently planning to acquire property over the next 12 months, with 55% planning to do so via a limited company.

How can remortgaging benefit landlords?

With lenders cutting interest rates and offering cashback on remortgage deals, now could be a good time for landlords to consider refinancing their portfolios.

In fact, separate data from Paragon found that remortgaging enquiries hit record levels in Q1 2018, and that figure has risen this year.

And, with many investors seeing their profits squeezed, more remortgage products are focusing on cutting up-front costs. These include fee-free remortgaging deals, cashback remortgaging deals and fixed-rate buy-to-let remortgage deals.

Remortgaging is also a legitimate way for aspiring landlords to enter the buy-to-let market. If you have a lot of equity on your home, remortgaging can allow you to release some of the money for a deposit on a buy-to-let property.

This can represent a cheaper approach than taking out a specific buy-to-let mortgage, as interest rates are typically higher in these cases.

Should you remortgage?

There are pros and cons to remortgaging, so if you’re interested in going down this route, ensure that you are doing so based on the key reasons below:

• You want to borrow more: Remortgaging to a new lender can enable you to raise money on low rates.

• Your current deal is almost up: When your mortgage ends, your standard variable rate is likely to be high. However, remortgaging to a cheaper rate is possible.

• Your home has risen in value: If the value of your property has risen since you took out your mortgage, you may be in a lower loan-to-value band, and eligible for much lower rates.

If remortgaging sounds like the right move for you, here at Angels Sales & Lettings, we can guide you through the process and more. For more information on our services in Enfield and Newham, please get in touch with us on 0800 043 6778.

Also, to find out how much your home could be worth on the current market, you can request a free and instant online valuation here.