4 Reasons Why Remortgaging Your Buy-To-Let Property May Be To Your Advantage

As a landlord, your financial affairs are a vital part of your property business. Not only do you have to file an annual tax return regarding your property investments but you should also regularly review the mortgages you have on your buy to let properties. Ensuring you have the best mortgage deals can help you increase your income from your property business.

Reviewing your finances and remortgaging your buy to let properties can offer a number of positive benefits. Our guide examines four of the main reasons why you should review your loans and consider remortgaging your investment properties.

Get a lower interest rate: This is the most fundamental one. Pay less money by getting a better rate. Most people remortgage to benefit from lower rates on their borrowing. If your existing mortgage deal has ended, you might automatically have been shifted on to your lender's higher rate.

Remortgaging allows you to take advantage of a low rate investment mortgage deal with another provider. You will typically have the choice of guaranteeing your repayments for a set period through a fixed rate mortgage or reducing your repayments with a discounted or tracker rate deal. Reducing your repayments also means that you earn more income from the property every month.

Releasing Cash: If any of your buy to let properties have equity, you can release the cash by applying for a remortgage. This is known as a further advance, whereby you can borrow additional money secured against your buy to let property. This is very popular in both residential and commercial markets, and lenders are often very accommodating with such ventures.

A common reason that landlords remortgage their houses and flats is to raise capital to allow the purchase of further investment properties. You can use your existing property as security to allow further borrowing which can provide the deposits for additional buy to let purchases. You don't have to use your savings or other capital to expand your portfolio.

Convert the mortgage to a repayment basis: It is quite possible that you took out your buy to let mortgages on an 'interest only' basis rather than on a capital and interest (repayment) basis. Many mortgages have been arranged on this basis in order to keep the monthly repayments as low as possible.

Part of the remortgage deal will allow you to switch your investment property from an 'interest only' loan to repayment loan. Though this might result in a higher monthly repayment, it will also mean the balance of your mortgage will decrease over time, leaving you with equity and a property that is exclusively yours at the end of the term.

Avoid selling the property: A remortgage can also help you avoid selling your property if you are in need of some extra cash. If you need access to some of the equity in your buy to let property - for example to buy another property or for home improvements - a remortgage will help you access cash without the need to sell the asset.

Being forced to sell your buy to let property may result in you achieving a lower price than you would want and it may also lead to a Capital Gains Tax liability. So, using a remortgage can help you access your equity and will allow you to retain ownership of your valuable property asset.

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