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

When you own a buy to let property, your property is not just an asset or an investment, it's a business. And it is of utmost importance to ensure that your business expenses are in order and that you're not paying over the odds for anything.

There are several advantages to remortgaging your buy to let properties. Our guide looks at four of the most compelling reasons to consider switching the investment mortgages on your buy to let portfolio.

Get a lower interest rate: One of the most popular reasons why landlords remortgage their investment properties is simply to secure a better interest rate on their borrowing. If your original buy to let deal has ended you could switch to a preferential rate with another provider rather than remaining on your lender's standard variable rate (SVR).

You may simply want to remortgage with your existing lender to take advantage of a better deal, but if a better deal isn't available you may have to hunt the market for a better deal from another lender. You can also change to another product type, such as a fixed rate deal.

Release equity from your properties: Equity is very valuable and also increasingly rare in a post housing crash economy. If you have been wise enough to build up equity in your property or portfolio, accessing a remortgage can enable you to release funds from these houses. If you remortgage you may be able to borrow extra capital from the bank, based on the level rental incomes and the equity in the properties. Lenders will normally be keen to allow you to raise funds as long as the repayments remain affordable based on the rental incomes and your income.

Remortgaging and releasing equity from your property can allow you to raise capital to purchase further investment properties. Your existing property becomes the security for cash to use as the deposits for additional purchases. This allows you to build up your property portfolio, increasing your rental returns and spreading your risk.

Convert the mortgage to a repayment basis: If when you decided to take out your 'buy to let' mortgage you did so on an 'interest only' basis. This will have had the effect of reducing your monthly payments, but it also means you are as good as renting, you aren't paying off any of full amount of the loan that you borrowed.

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: Because properties always gain value over time, try to hang on to yours, no matter how desperate for cash you get. If do find you are in need of ready capital, perhaps because of a lean period from other rental properties, or if you need to purchase another rental property, selling your own investment property may feel like it is the only choice. However, this can be avoided if there is some equity in your own home, a remortgage may be a better solution than losing a valuable asset.

Having to sell your property may result in a Capital Gains Tax liability or you may have to sell in a bad market. Remortgaging can give you a way of raising the cash that you need without having to sell an asset which may prove profitable in the medium to long term.

About the Author:
Timothy Frodsham writes for JustRemortgages.com one of the UK's
top sites for the latest remortgage rates and best remortgage deals.

Article Originally Published On: http://www.articlesnatch.com

Tags: Remortgage

, Remortgage Rates

, Remortgage Deals

, Best Remortgage Deals

, Buy To Let

, Landlords

, Property

, Property Portfolio

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