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Top Tips

Tuesday, 5th July, 2016

Remortgaging to a new buy-to-let deal can be a smart move for landlords looking for a fixed rate or possibly lower interest payments. And it is essential if you want to borrow more or release equity. Follow these tips for a successful switch...

1. Shop Around

It always makes sense to do your research thoroughly when it comes to your property investment. It pays to be aware of exactly what type of deals are available at any given time, and at what rates.

2. Check the Internet

The internet is a great starting point for doing your research. Sites such as www.bbg-dealfinder.co.uk provide an online tool to help you search the mortgage market to find the latest deal on offer.

3. Take a Medium to Long-term View

Look for a suitable mortgage product that will serve your needs best beyond the short-term. This may (or may not) mean paying a slightly higher interest tate than the one you are currently on, for example, if you wish to lock into the security of a fixed rate, rather than leaving youe repayments at the mercy of variable rates.

4. Weigh Up the Rate vs the Fee

Buy-to-let mortgages nowadays come with hefty fees. It is not unsual to be charged anything from a flat fee of £1,999 to 3% of the mortgage balance. Most lenders will offer a choice of higher fee, lower rate, or vice versa. Do your maths carefully to ascertain which is best for you.

5. Check Out Existing Penalties

Before you move to a new mortgage lender or deal, you must check with your existing lender whether there are nay Early Repayment Charges (ERCs) payable on your current arrangement. If you are on a fixed rate or a special tracker, the likelihood is that you will have to pay an ERC. However, if you are paying your lender's Standard Variable Rate (SVR) an ERC will probably not apply.

6. Find Out About New Penalties

Make sure you are aware of any ECRs or other charges that apply to your new mortgage. We live in economically uncertain times, when flexibility and the ability to change your financial arrangements can be very important to landlords.

7. Look for Flexibility

Check whether any new deal allows you to make over/under-payments. The best thing you can do with any debt is overpay and shift it as quickly as possible, and this particularly applies to mortgages when interest rates are relatively low. However, the option to underpay or take payment holidays on a new deal can also be very useful if you encounter rental voids or other problems in the future.

8. Choose the Right Lender

Different lenders currently offer different levels of service to different types of buy-to-let borrower. Many of the big names such as BM Solutions and TMW tend to cater for landlords with smaller portfolios, while others such as Paragon Mortgages, for example, aim specifically at providing finance for professional landlords with larger portfolios. It can be worth paying a slightly higher interest rate for greater access to finance or better service.


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