Remortgaging, in residential property, is something we covered in depth in an article in late 2022.
Since that article was published, we have received a lot of questions about remortgaging buy-to-let property; as it works slightly differently.
In her latest article, Commercial Property Solicitor Hannah Martin looks at how remortgaging works on buy-to-let property and outlines whether it’s a good option for you.
What is remortgaging?
Remortgaging involves changing the mortgage deal on your property, usually to your benefit.
Most of the time, people remortgage their property to switch lenders which, in turn, can lead to reduced monthly payments.
In addition, remortgaging can allow you to release further equity from your property or refinance after the end of a fixed rate period.
Can I remortgage my buy-to-let property?
Yes, it is possible to remortgage a buy-to-let property, however, most lenders will only remortgage properties that have an 80% loan to value ratio (LTV) or lower.
The loan to value (LTV) is the amount you've borrowed as a percentage of the property's value.
How does remortgaging work on a buy-to-let?
The remortgaging process works similarly to getting a mortgage on a residential property.
The lender will want to make sure that they obtain adequate security over the property and, therefore, will often make your solicitor complete due diligence on the property as if it was being purchased.
This due diligence can include undertaking searches on the property and reviewing the title.
If you hold the leasehold interest in the property, we may need to review the lease to ensure that the time left on the lease is over 80 years and complies with the lender’s other criteria.
If the lease is below 80 years, a lease extension may be required. At Frettens, we have a dedicated Leasehold Property Team, which is one of the largest in the area, who can help you with this. Call us on 01202 499255 to find out more.
When the sums are received from your new lender, we will use them to set up the loan with your existing lender and any surplus is then released to you.