A Quick Introduction to Buy To Let Remortgages

By: Gen Wright
Average price of a house is assuming an ascending slope in UK. Moreover UK is witnessing a tangible hike in demand of tenants. Lenders understand the virtue of this time. They have fathomed that there are people with the right kind of money or at least the right kind of will needed to buy a property. Later group of people are the target-base of lenders who are offering many fresh buy to let remortgage schemes. Lenders are verily minimizing the rental eligibility criteria and have also let the Loan to value ratio feasible come down from 85% to 65%.

The incentives go a long way in determining product flexibility. Such non-rigid dimensions help a buyer think seductively towards an offer of buy to let remortgages.

What then is buy to let remortgage? – It is simple. People buy property and then put it on rent. It is an easy way to realize rental revenue apart from being continuously ensured by the rising prices of the property. A lot of money would have flowed in as rent by the time an owner actually makes up his mind to sell the property.

How does it fare against selling a property? - There are times when property escalation seems to have touched the summit. In such cases, an owner feels like settling the issue for good and begins to look for buyers. Is it the right time? Let us argue. Let’s assume an initial interest only mortgage at 85% of worth of property. Even when the property doubles in price, the mortgage debt remains the same.

While selling the property, we will have to clear the mortgage debt, subtract the initial investment to the tune of 15% and further minimize the Capital Gains Tax. Mathematically our net gain would be in the realms of 35% of the price at which we sell the property. At the same time, we would be completely deprived of any further profit owing to future escalation of property prices.

Let’s now judge the other side of the coin. With increase in rate of property with time, the rent levels also take a sharp upward turn. Owing to the beneficial rent clause, we do not have to pay any Capital Gains Tax. The property remains with us and any lay man can confirm that amassing the 85% mortgage debt is quite feasible through accumulated rent. In fact the rent each month can help with paying the mortgage EMI.

While venturing into buy to let remortgage, it is important to understand that the current variable interest rates prescribed by the government are too high and we must abstain from them.

A quick tip - We can work further towards consolidated remortgage and consolidate our other lending commitments to the mortgage.

J P financial are whole of market UK mortgage brokers based in Bournemouth Dorset. Providing Buy to let mortgage quotes and recommendation for a wide range of BTL services.