How To Get A Buy To Let Remortgage
The housing market took with it a different kind of property development when it crashed a few years ago. Since the mid’90s, there was a special type of mortgage that banks have been willing to make, known as “buy to let mortgages”. These types of loans are for properties a buyer intends to rent out, and there for the repayments are calculated on the projected rental earning of the property being purchased instead of the wages or earnings of the buyer. With the recent housing market problems these loans seem to disappear and nobody was able to get one. Today, however, banks are again beginning to make buy to let loans and allowing property owners to take out a buy to let remortgage.
You can use a buy to let remortgage to refinance the original mortgage and benefit from more advantageous interest rates and payment guidelines, or to finance an additional property when someone is looking to expand their property ownership.
While being able to find a buy to let mortgage is not as simple as it use to be, there are still several lenders who are willing to give them if the credit score is high enough for that property owner. What makes it even easier is if the property is currently rented, and the owner can offer proof of the current income being generated by the property.
Buy to let remortgages can have repayment terms set up a couple ways – with the owner required to pay only interest due each month, or they can pay as a full repayment loan. Which terms work best for the owner varies from one property owner to another and one portfolio to another.
In general, the key criteria that banks look at when making a decision on a buy to let remortgage is whether or not the property can produce income equal to 125 percent or more of the interest that will be due on the loan each month. If the answer is yes, the loan will likely be approved.
Utilizing a buy to let remortgage to finance the acquisition of another property can be a savvy business move. When you do that, the property that is already mortgaged stays as the only one at risk if there is any problem repayment of the loan. It’s also much more simple to deal with one loan payment monthly rather than worry about different payments for different properties.
The real advantage to having a buy to let mortgage or remortgage is that the income from the property is expected to be sufficient to cover the bulk of the payments. Depending on what you do for income, other sources of income might not be high enough to even come close to loans on properties no matter what size they are.
Finding a buy to let remortgage may take some time and effort on the part of property owners. Expending the effort should be done though if one wishes to refinance his current buy to let mortgage to take advantage of changes in terms or to finance a new purchase without risking the new property. You may find it easier for you to get a buy to let mortgage for a purchase than it would be to get an original mortgage on new property.
Julie writes about subjects like buy to let remortgages and buy to let remortgages on her blog.
