Hond Financial

Posts Tagged ‘buy to let remortgage’

The housing market took with it a different kind of property development when it crashed a few years ago. Banks have decided to allow a special type of mortgage known as buy to let mortgages since the middle of the 1990s. These loans are for properties the buyer intends to rent out and the repayments are calculated based the projected rental earnings for the property rather than the wages and earning of the buyer. These loans dried up completely for a while and nobody was able to acquire one. Now, on the other hand, banks are starting to make buy to let loans, and are permitting property owners to obtain a buy to let remortgage.

A buy to let remortgage can now be used to refinance an original mortgage and take advantage of a better interest rate as well as payment terms, or when the owner is trying to grow their portfolio by financing another property purchase.

It might not be as easy to locate a buy to let remortgage as previously, although numerous lenders are willing to grant credit to property owners if they have an adequate credit score. It’s easier to get a loan if the property is currently rented, and the owner is able to proove how much income it produces.

Repayment terms for buy to let remortgages can be set up so that the owner is required to pay only the interest due each month or as a full repayment loan. The terms that will best suit the owner differ among different portfolios and different owners.

In general, the key criteria that banks look at when making a decision on a buy to let remortgage is whether or not the property can produce income equal to 125 percent or more of the interest that will be due on the loan each month. There’s a good chance that the loan will be approved if the answer is yes.

If you are able to use a buy to let remortgage to fund the purchase of other property, this can be a smart business decision. This way, the property that is already mortgaged remains the only one being risked in the event of problems repaying the loan. It’s also simpler for you to handle a single loan payment every month than having to deal with separate payments on separate properties.

The main benefit of obtaining a buy to let remortgage or remortgage is that the income derived from the property usually is enough to cover most of the payments. Depending on what you do for income, other sources of income might not be high enough to even come close to loans on properties no matter what size they are.

Property might have to dedicate some time and research to locating a buy to let remortgage (called maximale hypotheek berekenen in Dutch). However, making that effort is worthwhile if you want to refinance your current buy to let mortgage to be able to take advantage of a change in terms or finance a new purchase without risking the new property. It may also be easier to get a buy to let remortgage for a purchase than to get an original mortgage on the new property.