In any case of getting a mortgage or remortgage the first best step you can take is to contact a mortgage broker and inform him of your plan. Only a broker can easily find and recommend you the best deal available for your situation. If you want to get buy to let remortgages in most cases a better deal is made. Also, if you are a first time buyer buy to let there is some information you must know. More advice and information about these subjects are available below.
About Buy to Let Remortgages
If you have already got a buy to let contract or more than one, there are high chances that you might also want to remortgage. Whether to get a better deal or you just need to release some money to put down as a deposit for your next property, you need to contact a specialized broker to help throughout the entire process and make it less complicated than it may sound. It only sounds like a complicated action but in fact, the entire process can sometimes be easy. There are some things to know firsthand.
In case you were wondering if it is possible to remortgage a buy to let property, yes it is. The process of remortgaging means either switching to a lender with better deals and requirements or just getting a new one. The only difference between a normal residency mortgage and a buy to let one is the rental option. The most common reason for remortgaging a buy to let is raising extra capital. This can be used for improvements to the property or even funding a deposit for a new one. Buy to let remortgages are used as funding means for different actions.
How Does It Work?
At any time you start thinking about remortgaging your buy to let property and get the help of a broker you must be aware that you need to undergo the same financial procedures your first did when got the initial mortgage. This step is important for the lender to make sure you can afford to pay the monthly check back. The good thing is that you already received a mortgage and proved that you are a good investment by paying it back in time. As long as your income has not changed there should not be any reason for you not to be eligible to get buy to let remortgages.
Things Lenders Check
There are some general things lenders want to check before approving your buy to let remortgages request. Here is a short list of some aspects made after some research that you need to know you will be requested to provide when applying to get a remortgage:
· How much rent you are getting paid: the lender wants to make sure that you are charging the proper amount of money to cover your monthly repayment bill. There is a term to describe this action called a stress test. They are generally interested in seeing if what you are charging as rent for the property involved is at least 145% of your repayment. It is easier than it sounds. As an example, if your monthly mortgage bill is 500 pounds you should be charging 750 pounds per month for rent. This is a way to be sure you can afford to pay the loan back.
· How good you are managing your money: this subject mostly refers to keeping up with your monthly plan of paying back your mortgage. If you have got a good record of paying back and your credit score is high then you do not need to worry.
· Loan to value ratio: This ratio refers to the percentage of the entire value of the property you owe to the lender giving you a mortgage. For example, if your property's value on the market is 300.000 pounds and you owe 150.000 pounds to your lender the loan to value percentage is 50%. Keep in mind that the lower this ratio is the more equity you possess.
First Time Buyer Buy to Let
In case you have never had a buy to let mortgage and you are interested in getting one there are some things to know before. Like with any type of mortgage you should surely get in touch with a broker to make the entire process easier for you and to get the best deal available. Most lenders prefer new customers to already be homeowners but it is not mandatory in all the cases and some do make it possible for a first time buyer buy to let get a mortgage. For this to happen you must provide substantial proof that your income is good. Usually, any amount over 25.000 pounds per year is accepted. A deposit is needed to be put down first. Most lenders ask for a 25% deposit. It is also important that you have a good credit score in order for your application to be easily accepted.
While most people that invest in buy to let properties already own their home there are chances for a first time buyer buy to let to get the mortgage needed. If the annual income is equal to or more than 25.000 pounds per year and has a good credit score the application is granted.
First Time Buyer Buy to Let Interest Rates
Most lenders require their applicants to put down a deposit of a percentage of the entire property's value. While normally this percentage is between 5% and 25% as a first time buyer buy to let applicant you will be requested to put down at least 25% depending on the lender. Some require up to a 50% deposit. This is the most complicated part of this situation.
If you can afford to buy this deposit then there should be no problem throughout the entire process. You must know that you can also use a guarantor. While this is mostly encountered when getting a personal mortgage it is possible to use one in this case too. Some lenders will consider guarantors even if you do not meet the other requirements.