Investment Property Refinance
Landlords Recipe For Good Investment Property Refinance Deals
Sooner or later, a landlord will have to think about investment property refinance. There are many reasons why investment property refinance could become a priority for a landlord. For a start, many of the BTL mortgage deals have interest rates that are fixed or discounted for a set period. When this expires, the interest rate (and the landlord's payment) is likely to rise. This is one reason to consider refinancing.
Another reason is if the landlord's circumstances change. For example, some lenders may provide better deals to experienced landlords. If you have moved to this category investment property refinance may provide a better deal for your BTL property. A better deal on investment property refinance means more money in the landlord's pocket, which is good news for the success of the investment.
A third reason for seeking investment property refinance is to allow landlords to expand their property portfolios. As one BTL property appreciates in value, it may provide enough capital to allow landlords to purchase another property, rather than finding the cash from other sources. Many landlords use investment property finance to fund the purchase of a slew of properties that they intend to manage. Of course, refinancing can also be used to free up cash for other purposes, such as renovating a landlord's own home.
Choosing a Buy To Let Deal
Whatever the reason, there are plenty of deals to choose from when it comes to investment property refinance. Most BTL mortgage lenders offer remortgage packages which include free legal fees or cash back and no valuation fee. There may also be other incentives, depending on the lender. The terms of the deals vary with each lender, so it is worth shopping around. For example, a landlord's existing deal might set a ceiling of three BTL properties, so if a landlord wants to have more than three with one lender, there is no choice but to go for investment property refinancing. Some lenders provide BTL mortgages for 10, 15 or unlimited properties.
Another issue with investment property refinance is the loan amount, which can vary. Per property limits can be anywhere from £100,000 to £1 million, with some lenders imposing no limit on the property value. And the overall portfolio value can range from £2 or £3 million to as much as £20 million, depending on the lender's criteria and the borrower's circumstances.
These considerations aside, getting investment property refinance is much the same as getting the original buy to let mortgage. Mortgage lenders will be concerned with rental cover and there are complex calculations that balance pay rate, rental income and other factors. Overall, landlords can expect a rental cover requirement of around 125 per cent. Loan to value ratios also vary considerably, depending on the landlord's circumstances. Some lenders restrict buy to let loans to expatriate landlords to 65 per cent loan to value, while UK based landlords may get as much as 85 per cent loan to value with some lenders. And finally, the bottom line for landlords is the amount they will have to repay, so the interest rate is crucial when comparing investment property refinance deals.
