Remortgaging - are real savings possible?

Tue 27 Oct 2015

Brian Murphy
Head of Lending - Mortgage Advice Bureau

Many landlords have several properties which are mortgaged, some with different lenders, as well as a home, so the idea of re-financing individual properties probably feels like more hassle than it is worth.

However, we are finding that for landlords who haven’t remortgaged in the last year or so, reduced rates and a relaxation of some of the lender’s rules, especially around Houses in Multiple Occupation (HMO) and those who are self-employed, it is possible to save money.

How will reviewing my mortgage help?

It is possible to review buy-to-let mortgage deals yourself, but many lenders only offer their products through experienced brokers, so to save time and hassle and ensure you access all available deals, it is worth securing expert advice. This could help reduce your mortgage payments or, if you prefer, release equity to invest in more property.

What will I need to do?

To review your mortgages, you will need to collate some standard information including:

  • The value of the property at point of purchase
  • Whether the mortgage is repayment or interest-only
  • Outstanding mortgage levels
  • The lender(s) you are currently with and associated rates
  • Any special conditions e.g. discounted or promotional
  • What type of let(s) e.g. student or professional

In addition, it is helpful to have an idea of the property’s likely value if sold in today’s market.

All this information helps your broker search the market to find out if there is a better option for you to choose from versus your existing deal(s).

Will it cost me anything?

Although you may be able to save money when remortgaging, you are likely to need to pay some costs upfront. These can vary from one product and lender to another. Costs can involve a booking or admin fee, money transfers between bank accounts and, depending on your mortgage(s), you may have incur early repayment charges.

Will it be expensive?

At Mortgage Advice Bureau, our broker fees would be 1% less of the amount borrowed. These costs may feel high initially, but, because buy-to-let is a long term investment, over a period of years, it can still be cheaper to re-finance your property portfolio.

For example, if you reduced your mortgage by the average variable rate (where eligible), according to Moneyfacts.co.uk, this would be a reduction of 0.39%, which on a £100,000 loan would give a saving of £390 per year. Over a ten year period this would be nearly £4,000.

For further information call 0330 2210 200 or visit us at www.mortgageadvicebureau.com/leaders.

You may have to pay an early repayment charge to your existing lender if you re-mortgage.

There is no guarantee that it will be possible to arrange continuous letting of the property, nor that rental income will be sufficient to meet the cost of the mortgage.

Your property may be repossessed if you do not keep up repayments on your mortgage.

There will be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee is 0.3% of the amount borrowed.

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