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Renewing Your Buy to Let Mortgage: Navigating Costs as a Landlord

MORTGAGES | 13.08.2024

There are many factors to consider as a landlord when the time comes to renew your buy to let mortgage, from market conditions to your personal financial situation and life goals, whatever the reason it can be a pivotal moment in your property investments. Due to fluctuating economic conditions, increased costs are a big worry for landlords, so here at your trusted mortgage advisor in Manchester, we thought it helpful to pull together this article to help guide you in your buy to let investment journey.  

Why Remortgage Your Buy to Let Property?

There are many reasons that landlords renew their buy to let mortgages, such as:
  • Their current deal is coming to an end – within 6 months of ending is a good time to start looking to avoid switching to your lender’s standard variable rate (SVR).
  • Get better BTL rates – reviewing the market regularly will keep you informed of the best rates on the market, allowing you to switch to a better deal if within your lender’s terms and conditions.
  • Wanting to move into a property you once rented out – this will cause you to remortgage as you will need to switch from a buy to let mortgage to a residential one.
  • Releasing equity – this can be a good opportunity to expand your property portfolio. Equity can be used to fund repairs or improvements or to consolidate debts into one and reduce monthly outgoings.
 

Costs to Consider When Renewing Your Buy to Let.

Before entering into a remortgage on your buy to let, it’s important to understand what the potential costs will be, to ensure you are financially prepared. Remortgaging shouldn’t be an issue if your circumstances haven’t changed since first taking out your mortgage, but if they have there will be checks you need to pass both personally and by your lender. Interest Rates Interest rates are an important factor and are the most volatile at present due to market conditions but also due to your creditworthiness and your property’s location. Ensure you shop around for the best deal or use a mortgage advisor to do the job for you.   Arrangement Fees Most lenders charge an arrangement fee for setting up a mortgage which can range from a few hundred to several thousand pounds. Sometimes, lenders allow you to add this fee to the mortgage amount, but this means you'll pay interest on it, increasing the overall cost. Valuation Fees A property valuation is required to assess its current market value. It's a necessary expense to ensure the lender that the property is worth the amount they're lending. Legal Fees A solicitor or conveyancer is required to handle the legal aspects of your mortgage renewal. However, some lenders offer free legal services for remortgage, so it's worth checking with your lender. Early Repayment Charges If you decide to switch lenders before your current mortgage term ends, you might incur early repayment charges (ERCs). These charges can be substantial, so it's crucial to factor them into your decision-making process.  

How to Keep Costs Under Control.

Planning ahead is crucial when it comes to renewing your buy to let mortgage to help navigate the ever-changing interest rates, market conditions, and lender policy alterations. Financial strain is a potential outcome of higher mortgage payments if you haven’t taken the time to research the market, however, it’s important to also remember that you are not powerless in the face of rising costs. Understanding the terms of your existing mortgage can help, such as your repayment period, interest rate, and potential penalties for early repayment, and also navigating alternative mortgage products and lenders. It may be that you find more favourable terms by negotiating with your current lender or switching to a different one.  

Renew Your Buy to Let with the Future in Mind.

Keeping a contingency budget is advisable when it comes to remortgaging your buy to let, to allow for unexpected cost rises and market fluctuations. The higher a contingency budget you have the better cushion you will have to absorb these shocks to your cash flow. It is also a good time to review your investment strategies and figure out if your buy to let properties are generating your expected turnover. Should you consider expanding your portfolio or selling underperforming properties?  

Consider Professional Help from a Mortgage Advisor in Manchester.

Renewing a buy to let mortgage is overwhelming as there are so many things to consider however, the help of a trusted mortgage broker in Manchester such as Taylormade can really take the stress out of the situation. At Taylormade, we have endless experience and knowledge in buy to let mortgages making us the leading mortgage broker in Manchester with the ability to make this process as quick and simple as you need.  To get the best deals, speak with the leading mortgage advisor in Manchester today, also operating throughout the UK. Our team is here to help scour the market and get the best deal for you. 
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