Buytoletbroker.com is one of the UK 's leading independent buy to let brokers specializing in arranging remortgages. We have access to 1000s of buy to let schemes and are confident that we can find the right product for you. So why consider remortgaging?
There are numerous reasons why it might make sense to remortgage your buy to let property; perhaps you are approaching the end of an introductory fixed rate repayment period, or perhaps it is time to release some equity and take the next step toward expanding your buy to let portfolio. Let's just look at one scenario:
Supposing your first buy to let property cost £150,000 and you took out an 85% interest only mortgage totaling £127,500. Let's assume that since you purchased the property it has risen in value by 50%; so it is now worth £225,000 with the same outstanding mortgage balance of £127,500. There are a number of options open to you:
The first is to leave things exactly as they are; every month you'll receive rent and your property will hopefully continue to increase in value. The second option is to put the property on the market; after all surely you stand to gain close to £100,000? Don't forget that you will be liable for Capital Gains Tax of between 26% and 40%; the lower figure being reserved for landlords who have owned the property for longer than ten years and claimed every allowance. It's still a handsome profit, but there is a way to further increase returns.
Arguably the most financially shrewd option is to remortgage. If your property has increased in value by 50% you will be able to raise £95,000 without having to pay Capital Gains Tax (of course you will have to pay it in the long run) and you still own the property. It's up to you what you do with the money, but it's enough to put down deposits on another four £150,000 buy to let properties with 85% mortgages.