Buy-to-Let Remortgage

A buy-to-let remortgage is simply a way of switching to a new mortgage deal, either with your existing lender or a new one. It can save you money, free up cash tied to your rental property, or let you change the way your mortgage works. Whether you’re a new landlord managing your first rental or a seasoned property investor, remortgaging is one of the smartest ways to keep your investment running smoothly.

Whatever you’re looking for from your buy-to-let property, we aim to make your next mortgage move feel simple, straightforward, and a lot less stressful.

Can You Remortgage a Buy-to-Let?

Yes, absolutely. It's a very common practice for landlords, just like it is for residential homeowners. A buy-to-let mortgage deal usually has a fixed term of two, three, or five years. When that term ends, you'll want to find a new mortgage deal to avoid being moved onto your lender's more expensive Standard Variable Rate (SVR).

Remortgaging is an ideal opportunity for you to review the market and secure a deal that aligns with your long-term investment goals. You’ve got two options when you remortgage:

• Switch to a new lender: This is often done to secure a better deal or unlock equity.

• Stay with your current lender (a product transfer): A simple switch to another deal with your existing provider.

Either way, the process is much like when you first applied for your buy-to-let mortgage. The lender will check your property’s value, your rental income, and your finances before approving a new deal.

Why Would You Remortgage a Buy-to-Let?

There are several reasons why landlords choose to remortgage. The right one for you depends on what you hope to achieve with your buy-to-let investment.

• To get a better rate: This is the most common reason. If interest rates have dropped or you've built up more equity, you can find a more competitive deal.

• To release equity: If your property has increased in value, you can release some of that cash for other purposes. This could be used for further investments, to consolidate debts, or to pay for home improvements.

• To borrow more money: Remortgaging allows you to increase your loan amount. You might do this to expand your property portfolio or pay for renovations in your existing buy-to-let, which in turn could increase your rental yield.

• To switch from residential to a buy-to-let mortgage: If you want to rent out a property you used to live in, a remortgage can convert your existing mortgage to a buy-to-let mortgage to reflect the property’s new purpose.

When Is the Best Time to Do It?

The golden rule for remortgaging is to start looking around three to six months before your current deal ends. This gives you plenty of time to find and apply for a new mortgage without the pressure of a deadline. It's also the best way to avoid falling onto your lender's Standard Variable Rate (SVR), which is almost always a lot higher than any other mortgage deal. 

If you decide to remortgage your buy-to-let before the current deal ends, be sure to check for any Early Repayment Charges (ERCs). These can be costly, and in many cases, it could be cheaper to stay put until your deal expires. However, it still may be worth considering whether the savings from a new mortgage deal outweigh any penalties. 

How Much Equity Do You Need to Remortgage?

For a buy-to-let remortgage, lenders typically look for a minimum of 25% equity in the property (the difference between what your property is worth and the mortgage debt) to approve your application.

For example, if your buy-to-let property is valued at £200,000 and you owe £150,000, your equity is £50,000. This gives you an equity percentage of 25% (£50,000 ÷ £200,000 x 100), which should be enough for most lenders. However, a higher equity amount will give you access to lower interest rates and a wider choice of mortgage deals.

Are Buy-to-Let Rates Higher than for Residential?

Yes, generally, the interest rates for buy-to-let remortgage deals are slightly higher than for residential properties. This is because buy-to-let mortgages are considered to carry more risk for lenders, due to their purpose as a business investment and the potential for periods where the property stands vacant. 

While the interest rate may be higher, many landlords offset this by using an interest-only mortgage, which keeps monthly payments lower. This leaves more cash flow for other expenses or to increase your monthly income from rental profits.

How Can You Get the Best Buy-to-Let Remortgage Rates?

There are a few key things you can do to increase your chances of getting the best buy-to-let remortgage deal.

• Boost your rental income: Lenders base affordability on the rental income. A higher rent can increase your borrowing potential and make your application more attractive.

• Increase your equity: The lower your loan-to-value (LTV) ratio, the better the rates you'll be offered. A lower LTV shows the lender that you’re less of a risk.

• Improve your credit score: A strong credit score demonstrates that you're a reliable borrower with a good track record of managing debt.

• Use a mortgage broker: This can make all the difference. At Picnic, our mortgage team has access to the entire market, including exclusive deals you won't find on your own. They can compare hundreds of buy-to-let remortgage deals and guide you to the right one for your circumstances, saving you a lot of time and stress.

How to Apply for a Buy-to-Let Remortgage

Remortgaging a buy-to-let property is similar to applying for a residential mortgage. Here are the key steps to follow:

1. Check your current deal: First, find out what your existing mortgage deal is and when it ends. Look for any early repayment charges that might apply.

2. Get a property valuation: Have your property valued to determine the amount of equity you have. An online tool can provide a rough estimate, but a formal valuation will be done by the new lender.

3. Find a new deal: This is where we can help! Our buy-to-let team will search the market to find the most competitive remortgage deals for you.

4. Submit your application: Gather the necessary documents, including proof of income and rental agreements. We can help prepare and submit your application so that it has the best chance of approval the first time around. 

5. Valuation and legal work: Your new lender will assess the property's value, and a solicitor will handle all the conveyancing work to transfer the mortgage.

6. Completion: Once all the checks are done, the new mortgage will begin, and your old one will be paid off.

What Are the Alternatives?

If you decide that remortgaging isn’t for you, the most common alternative is a product transfer. This is where you stay with your current lender but switch to a new mortgage deal from their range.

The main benefit of a product transfer is that it's much quicker and simpler than a full buy-to-let remortgage. Since you're staying with the same lender, there's usually no need for a new valuation or a new solicitor, which can save you both time and money. 

The main drawback is that you won't have access to the full market, and you won’t know for sure if the deal you’re offered is the best you could have got.

Why Pick Picnic for Your Buy-to-Let Remortgage?

Trying to find the most competitive buy-to-let remortgage deal on your own can be a challenging and time-consuming process. Having an experienced mortgage broker on your side - like us! - makes things much easier and more efficient. 

With access to thousands of mortgage products, easy-to-use technology, and 100+ experts, our award-winning service is with you every step of the way. Here’s how we can help:

• Finding you the best mortgage deals: Our mortgage team will already know which lenders are currently offering the most competitive rates, having access to the wider mortgage market rather than just a handful of high-street lenders. They can compare mortgage deals from over 100 lenders to find the one that’s right for your circumstances, including exclusive offers not generally available elsewhere. 

• Your remortgage, made simple from start to finish. Our online portal allows you to track your mortgage application step-by-step, sign and upload documents in seconds, and contact your mortgage team at any time. No back-and-forth emails. No printing. No guesswork. Everything you need, all in one place, so you can stay organised and in control of your remortgage journey. 

• Making mortgages possible, whatever the circumstances: Our team of advisors have a clear understanding of the eligibility criteria used by each lender and will identify the one that's best placed to help. Our sister brand, Haysto, has become the No.1 destination for customers who've been turned away elsewhere. For anyone with a complex income or adverse credit record - we’ve got your back!