Buy to let remortgages
Why Re-Mortgage your buy to let property?
There are two main reasons for re-mortgaging:
-
Pound for pound re-finance in order to
improve on existing terms.
-
Re-finance, plus additional lending on
better terms.
Let us look at the two situations.
1. Pound for Pound Re-finance
You entered the buy to let market with an
interest-only mortgage of £85,000 on a property
worth £100,000. Over the past years the value of
your property increased in value and it is now
worth £200,000 with £85,000 still owed on the
mortgage. When
you arranged the loan, hopefully you would have
managed to obtain a Buy to Let mortgage on some
kind of initial preferential terms; say for two
or three years. At the end of this initial
period, in most cases the loan will revert to
the lenders standard variable rate. That of
course is more expensive, and your own lender
will be reluctant at best to do anything about
this for you. What can you do?
Well you could leave things exactly as they are!
OR
You could re-mortgage and save yourself some
money!
There is only one sensible option; so
contact one of our
team to find out how much you can save.
2. Re-Mortgage plus additional lending
By this time you have probably noticed that you
have £ 115,000 of equity locked up your
Investment property. You have two choices
available:
-
Let it sit there and do absolutely nothing
for you
OR
-
Make it work for you in some kind of
beneficial way.
How?
Well, why take out expensive, short term, high
rate loans when you could secure a better rate
loan over a longer period. NB Remember this is
an investment, you don’t live there and
therefore you are not risking the roof over your
head!
OR
You could extract some equity and expand your
portfolio…you know that works.
For advice on buy to let remortgages please
contact our
specialist mortgage brokers.
Alternatively you could put the property on the
market. However, if you intend sell it is
important to factor Capital Gains Tax in to your
calculations.
Arguably the most savvy option is to consider
remortgaging. If your rent and property value
have doubled, you are now in a position to
double your mortgage. This would raise £85,000;
there's no Capital Gains Tax to pay and the
property is still yours. Capital gains tax will
still be payable when you sell the property.
How you use the money is up to you, but if you
set some aside as a deposit on another buy to
let property you have the beginnings of a
property portfolio.
Let
Property Strategies Ltd are Property Consultants and Mortgage Brokers. All views expressed
are those of Let Property Strategies and the information is believed to
be correct at the time of issue.
The examples shown within this site are for illustrative purposes
only, exclude repayment of capital and allowance for void periods and
should not be construed as any form of recommendation. Interest rates
may vary and taxation, which has not been included in any example, will
depend on individual circumstances. The value of investment property and
rent levels can go down as well as up. Investors are advised to seek
appropriate legal advice before entering in to any contractual
agreement. Feb 2007
Your home may be
repossessed if you do not keep up repayments on your mortgage. Written
details on request. Loans subject to status
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