You should review your residential mortgage every two years at least, depending on how long your latest term is, so that you’re getting the best and cheapest deal possible for the place you’re living in. When it comes to a property that you’re hoping to make a profit with, making sure you’ve got the best finance product is even more important.
Re-mortgaging your BTL property can help you in a number of ways, so if these reasons for re-financing spark some interest (sorry) for you, then it could be time to do exactly that.
You could find a better interest rate
If you can find a significantly lower interest rate then you’ll be paying less on your mortgage each month, which means more profits for you. If you’re nearing the end of your current term, it might be worth switching early as the monthly savings may outweigh any break fee you might have to pay.
You could release some equity to pay for improvements
You could re-mortgage to release some equity so that you can pay for improvements to your BTL property, rather than using savings or taking out an expensive loan. Making improvements could add extra value to your property – more than you spend on them – which will come in handy when it’s time to sell.
Release some equity so you can reinvest it elsewhere
If you bought your BTL property with cash, or if you’ve been paying down the mortgage and letting its value rise for several years, then pulling out some money and investing it into another vehicle could work well.
If you have four or more BTL properties, then this makes you a portfolio landlord and so your total borrowing can’t be more than 75% of your portfolio’s value.
Release a lump sum and have fun!
If you have a lot of equity in a property and you manage to find a lower interest rate to re-mortgage to, then you could take out enough money to buy a dream holiday or car or a second home overseas. You could also increase your pension fund or help one of the children through university – whatever you do with your money, you’ve earned it.
