Buy to Let Remortgage

And on this episode of the mortgage and protection podcast we have Scott back from Propertyze to talk all about re-mortgaging a buy-to-let property. That is great to chat with you again Scott, how's it all going? Yeah very well thank you very well this should be a nice short sweep when I think so yeah looking forward to getting into it. Yeah definitely glad you're well as well so okay well let's get straight into the questions that we've got here then. So first of all naturally people would like to know can you re-mortgage a buy-to-let or on a buy-to-let? Absolutely you can, two different routes to go down depending on where you're at with the property. You can product switch with your current lender

which is usually quite straightforward or we can go and look at a new deal with a new lender which people tend to do if they really want to squash the rate down as much as they can make some savings or re-exequity. Right okay there we go so that's clear there that answers that doesn't it so just following on we do have a question that also asks why re-mortgage your buy-to-let so what are some of the reasons here? So typically people look into re-mortgage they've come to them their fixed product. Fixed products are pretty much the only thing I see sold these days although trackers are available and discounted rates. They've come to them with a product the rates jump back up to a standard variable

product usually a lot higher than you were paying before so people want to fix again or you know change their product to reduce their monthly costs make as much profit as they can in the buy-to-let and more often than not people want to release equity. Take a little bit of equity out of that property and buy another property or reinvest it somewhere else or refurbish that property so lots of reasons to re-mortgage. Okay brilliant thank you for that so then again this leads on to the next question how do I re-mortgage a buy-to-let so what is the process? Speak to your broker hopefully yes there's a lot of changes in the buy-to-let market in the last seven eight years now we've had an affordability so

it's not quite straightforward it's going like at a thousand pound a month I can just borrow as much as I want you need to find the right lender but the right product and the right affordability calculator is to ensure that you have enough coverage for your mortgage. Now if you're up in the the mid-lens or the north your property probably has a good enough yield you can probably pick most lenders but if your property is in the south or southeast yields are relatively low because property prices are much higher your rental income doesn't go quite as far you can't just pick a random product it doesn't work that way so you need to be a bit creative with which lenders you choose and the product you choose to make sure

you get the loan that fits particularly if you're capital raising as well we need to really make sure that the affordability calculations make sense. Right okay so some points there to bear in mind then now moving on to this question can I be refused a buy-to-let re-mortgage? Yes you can for a number of reasons perhaps the the lender you've gone to your rental income doesn't cover the valuation reports come back and said that the market rental was dropped in the area or just doesn't meet the loan requirement you need in which case the lender might recline it if the valuation report comes back with problems with the property you know it's um it was fine five years ago when you've really first mortgage did but now

it's had some some damage or it needs some work doing to it to bring it up to standard again again the lender might decline that EPC certificate so I think now so if your EPC state rating isn't up to scratch a lender might decline it until you've done that or if your credit has changed if your credit status has changed from good five years ago when you did it to to poor now you've missed some payments a lender might decline for that reason so a myriad of reasons that you might be declined but there are always solutions to that so if your advisor's up front and we have a full picture we can make sure we end up at the right place right lender and avoid those those problems. Right okay so some points to bear in mind there but hopefully that sounds

reassuring as well so let's continue the next question here asks how long does it take to remortgage a vitalet? This has changed so I used to always say to people especially on a remortgage there's obviously a lot less legals to to do than the purchase that a remortgage would take you six to eight weeks so less than two months but solicitors are getting a lot slower I can't really pinpoint why. Convancing is just taking a lot longer to get through it might be something to do with land registry being so far behind applications behind it makes makes it difficult for lawyers to finish up what they're doing so these days I'm saying more like 10 to 12 weeks for remortgages if we can get it done sooner we will but if you target

and be mindful it might be 10 to 12 weeks you're not disappointed then if we do run up to that kind of time frame. Yes very true there but there we go that just gives you an idea of the time frames. So okay the next question here asks what costs are involved then with remortgaging your vitalet? So this depends whether you're going down a product transfer or a new mortgage route if you're going down a product transfer this means you want to stay with your current lender not borrowing any more money you just want to switch very easily with whoever you're currently with in most circumstances there's no valuation fee there's no legal fees you'll probably pay a small product fee so it might be like a thousand pounds

added to the loan and the lender will switch it over on a given date so you can probably do it within two or three weeks sometimes a little bit earlier of your product end date and the broker can do that for you and it takes a few minutes so very little costs that route but it means you don't get the market options if your lender only has a few products if you're going down the remortgage route with a new lender then you're going to be paying new valuations new legals an arrangement fee it could be a percentage could be a fixed fee possibly a broker fee as well depending what the case is right okay so two options there to bear in mind and when it comes to the cost and now this next question follows on

from that do you have to pay stamp duty when remortgaging this is to a vitalet i think it means remortgaging your vitalet yeah i'll answer it both ways and answer as no both ways so if you if you're turning your home into a vitalet you don't have to pay stamp duty presuming that you're keeping it your same name so you brought it your personal name you've moved out of it you've brought a new home for example but you weren't turning your own home into a vitalet you already paid stamp duty so nothing to pay you just do a new vitalet mortgage on it it was one you already own as a vitalet again you've already paid for it it's yours the only time that stamp duty would be payable is if you move it from your personal name to a

limited company and that would be because on paper technically it's a sale and a purchase you're selling it to your limited company which is buying it so there is stamp duty payable there but yeah for most other people most people most circumstances no no stamp duties payable okay well thank you for covering that there both questions as well depending on the circumstances that you're in uh now we've got two questions left so the next one here asks what are the benefits of remortgaging a vitalet property now you covered the reasons didn't you as to why someone might be looking to do this so this kind of ties in doesn't it yeah i think i've kind of covered it but i'll kind of go into a bit deeper i

guess if the property is increasing value again you could either benefit from a lower loan to value so if you don't increase your loan but the property is increasing value your loan to value hasn't is improved that might make you that might move you from a 75% product to a 65% product for example which might increase your product rates you know improve your product rates increase them improve them and if you want to take out any additional equity again if you created equity in that property through refurbishment or if the market has just improved your property value over time and you want to take that cash out to go and buy new property a remortgage will allow you to do that whereas a product transfer might

you'll do a product transfer and further advance with a certain lender and that takes just as long and you won't benefit from the open market kind of view remortgaging can be more beneficial if you're looking to do to benefit from maximum rates or usual equity right okay so clearly explained there thank you for breaking that down when it comes to the benefits and then just lastly as always i mean you have demonstrated how a broker can help here scott's but is there anything else we need to consider here or is there anything else you'd like to add yeah i guess the best thing really is just to cover how we help we take you through the application process we manage the lender but it's especially with buy-to-let it's ensuring that you end up with the

right lender for affordability purposes but the majority of clients might not meet the income requirements for those in terms of rent and income calculations so this is where brokers help we can take your information we know where to go to which lenders to approach which calculations to run through and we know how much we can borrow and how to minimize any additional costs on top of that so a lot to add there yeah okay well thank you for that scott's really clearly explained uh as i've said as well and i'm sure we'll speak to you again on the podcast soon perfect i look forward to it thank you very much please note your property may be repossessed if you do not keep up with your mortgage repayments the financial conduct authority does not

regulate most buy-to-let mortgages