- Personal Finance
Reasons to Use a Buy to Let Remortgage
A Buy to Let Remortgage
A buy to let remortgage is just what the name implies, it is a remortgage on buy to let mortgage. There are a number of good reasons that a property owner may want to use a buy to let remortgage, but the most common are to save money or to increase the value of their investment portfolio.
The most common reason to use a buy to let remortgage is to use the equity in one property in order to make the down payment on another. Buy to let mortgages usually require large down payments, far more than is required for a property you intend to live in. This obviously limits the number of properties that you can purchase. Recognizing this problem banks have started to make buy to let remortgages available in order to allow landlords to buy additional properties.
The reason that most people remortgage a property is to save money on interest and this applies as much to rental properties as any other. When you take out a mortgage you will end up paying far more in interest than the original value of the loan, reducing the rate, even by a small amount can result in a huge savings. There are fees involved in a buy to let remortgage, there will also probably be penalties for paying off the initial mortgage. It is important to make sure that the money you save in interest will be enough to cover the cost of those fees.
One of the best ways to increase the value of your property is by making improvements, this is especially true of rental properties. Not only will improving the property increase its value it will also allow you to increase the rent you are charging. The downside of improving your property of course is cost. A major renovation is very expensive and many landlords simply don’t have the money. A buy to let remortgage will allow you to use the equity that you have in the property to pay for the improvements.
You may also want to remortgage a rental property in order to use the cash for something else. A rental property is an investment, obviously you expect to turn it into cash at some point. There is no reason that you have to sell the property to be able to turn it into cash. A buy to let remortgage will allow you to cash out the equity while still holding onto the property so that you can continue to benefit from your investment.