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How a Buy to Let Remortgage Can Increase Your Real Estate Holdings

Updated on August 17, 2010

A Buy to Let Remortgage

 

There are a number of good reasons that somebody would want to buy a property in order to rent it out. It is one of the best investment options available since the value or real estate has historically appreciated at a faster rate than other investment vehicles. There are however risks involved in real estate investing and these need to be kept in mind. One of the biggest issues when it comes to real estate investments are the fluctuation in property prices. The best way to deal with this issue is to own more than one property so that you are not putting all of your eggs in one basket. Of course coming up with the money to do this is an issue for most investors. Fortunately a buy to let remortgage can help address this problem.

 

A buy to let mortgage is a loan that has been created specifically for investors who intend to buy a property in order to lend it out. The biggest difference between a buy to let mortgage and a regular mortgage is that you can use the money paid in rent as proof on income when you apply for a buy to let mortgage. Providing you can show that there is a reasonably good chance that you will be able to rent the property out you can even claim this income before you buy the property. This makes it much easier to buy a property to let since most people otherwise wouldn’t have enough income to pay for both a rental property and their own home. The down side to buy to let mortgage is that it requires a much larger down payment, usually 20% or more. Obviously this makes it difficult to purchase multiple rental properties, fortunately a buy to let remortgage can help deal with that.

 

A remortgage will allow you to take the equity out of your home and turn it in to cash. You can do this with the home you live in or with a property that you are letting. In a buy to let remortgage you would simply take out a new mortgage to replace the existing one, any equity would be turned into cash. That cash can then be used to make the down payment on a new property, allowing you to increase your real estate investment portfolio.

 

There are times when it may not be appropriate to remortgage your property so you it is often a good idea to talk to broker who specializes in buy to let remortgages. He will be able to help you decide if it is a good idea in your case and make sure that you get a good deal.

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