The mortgage market has been a minefield of changes recently, with the base rate being reduced to its lowest level in over 10 years and various other lenders introducing competitive changes to attract customers. In this article we'll be looking at two different types of mortgages that are often confused as one - buy to let remortgages and first time buyer buy to let.
What is the Difference Between Buy to Let Remortgage and First Time Buyer Buy to Let?
If you're thinking of becoming a buy to let landlord, you might be wondering what the difference is between buy to let remortgages and first time buyer buy to let mortgages. The main difference is that a buy to let remortgage is for investment purposes in an already bought property, whereas a first time buyer buy to let mortgage is for people who are buying their brand new home, for renting purposes.
With a buy to let remortgage, the lender will take into account the potential rental income from the property when assessing your application. They'll also usually require a larger deposit than they would for a first time buyer mortgage. The interest rates on buy to let remortgages are also usually higher than on first time buyer to let mortgages.
However, there are some advantages to taking out a buy to let mortgage as a first time buyer. For example, you may be able to get a lower interest rate if you have a good credit history. And, if you're planning on letting out the property to tenants, you may be able to get tax relief on the mortgage interest payments. So, if you're thinking of becoming a buy to let landlord, it's worth doing some research into this type of mortgage, before making your decision.
The Advantages of Remortgaging a Buy to Let Property
There are many reasons why you might want to remortgage your buy to let property. Maybe you’re looking to release equity to make some home improvements, or you want to consolidate other debts. Whatever your reasons, there are some definite advantages to remortgaging your buy to let property. Here are just a few of them:
· You could save money on your monthly payments
If you’ve been in your current mortgage deal for a while, you could likely get a better rate by switching to a new deal. With interest rates at historic lows, now is a great time to compare deals and see if you could make some significant savings on your monthly payments.
· You could shorten the term of your mortgage
While you may have to pay slightly higher monthly payments, remortgaging onto a shorter-term deal could save you money in the long run. This is because you’ll pay less interest overall and will become mortgage-free sooner.
· You could release equity from your property
If you’ve seen the value of your property increase since taking out your original mortgage, you could potentially release some of that equity . However, a remortgage is not an instant ‘get rich quick scheme and you’ll only make a real difference if you have a high loan-to-value mortgage. However, it’s worth bearing in mind that there are risks involved with taking out a remortgage. For example, you could lose your cheaper deal altogether if your new monthly payments are higher than those of the old one. But, by shopping around and looking at different mortgage deals, you can usually find a lender that is willing to give you the mortgage rate you need. If you have equity from selling your home and want to release it, you may be able to release some cash by using a home reversion scheme.
How Much Money Can I Get from Remortgaging My Current Buy to Let Property
If you're a buy to let remortgages landlord looking to remortgage your property, you may be wondering how much money you can get from the process. There are a few factors that will affect how much you can borrow, including the value of your property, your income, and your credit history.
The amount you can borrow will also depend on the type of mortgage you're looking for. If you're looking for a standard buy to let remortgages, you could borrow up to 80% of the value of your property. However, if you're looking for a specialist buy to let remortgage, such as an interest-only mortgage, you could borrow up to 90% of the value of your property.
The best way to find out how much you could borrow is to speak to a mortgage advisor. They'll be able to assess your circumstances and give you an indication of the amount you could borrow.
What Is the First Time Buyer Buy to Let Mortgages?
This is a scenario less known among brokers because most of the appliances for buy to let mortgages are from owners of an already house. But sometimes, people who live with parents or partners choose to buy a house for rent, as a business model. The difficulty with this kind of product is that you need a deposit of 25%. Some brokers who haven’t dealt yet with this situation, may not know how to help you.
Besides that, lenders consider you a high-risk landlord and some of them may refuse to take this risk. But all things have a starting point, so it is possible to find a lender willing to sell first-time buyer buy to let mortgages.
The main difference between a buy to let remortgage and a first time buyer buy to let is that the former is for people who already own a property that they're looking to rent out, while the latter is for people who are looking to purchase a property specifically to rent it out, without owning another property. Both products usually require a larger deposit than a standard mortgage, and the interest rates are usually higher as well.