Turbulent times in the buy-to-let sector leaving landlords with fewer refinancing options

Why remortgage your buy-to-let?

1. Avoid your lender's standard variable rate

Many lenders have appallingly high standard variable rates, and if you do not remortgage or switch rates, you will probably end up on your lender's automatic reversion rate. This is likely to be around 8 or 9%. For example, BM Solutions, once called Birmingham Mishires, currently has a reversion rate that tracks the Bank of England Base Rate +4.34% for the life of the loan (currently 9.34%).

2. Carry out property improvements 

To meet proposed new laws, many landlords will have to make their properties more energy efficient over the coming years. This is going to result in costly improvements.  

It is understood that the Government plans to force landlords to increase their properties' Energy Performance Certificate rating to a minimum of a C standard to help reduce the nation's carbon footprint. 

According to recent research on behalf of the National Residential Landlords Association* in Q1 2023, 33% of private landlords in England and Wales said they planned to cut the number of properties they rent out. This is an all-time high recorded according to BVA-BDRC, the firm that did the research and is up from the 20% who said they planned to cut the number of properties they let in Q1 2022.  

You can check the EPC rating for properties by clicking here. The website also explains the potential costs of improving properties' energy efficiency.  

3. Switch your buy-to-let portfolio to one lender

Some lenders are still keen to provide portfolio buy-to-let mortgages, especially for established landlords. Lenders can assess the rental income of a portfolio rather than individual properties and charge one rate. Also, one payment can come out of bank accounts, reducing the amount of administration work required to ensure payments are made on time.  

How to get the best buy-to-let remortgage rates for your circumstances

Landlords have a lot of buy-to-let mortgages to choose from, although they are more expensive than they were. To access the most competitively priced deal, you must meet strict requirements and have a high amount of equity in your property, often around 40%. The property must also generate enough rent for the all-important rental stress tests.

The lowest buy-to-let rates are often dependent on the following factors:

• Your credit history. Missed payments and CCJs can cause real issues leading to landlords paying much higher rates with adverse credit lenders. 
• Your income - having your latest payslips or company accounts speeds up the remortgage process.  Some lenders will use PAYE income or self-employed income to offer larger loan sizes. 
• The size of your deposit or how much equity you have in the property (i.e. how much of your mortgage is compared to the property's current value). A larger deposit or higher levels of equity help.
• The type of property that you own and who it is let to. For example, some lenders do not like it if you let it via Airbnb or if it has deck access. Click here to read our Airbnb mortgage blog. 

Get your documents ready for your buy-to-let remortgage rates 

• Get your paperwork in order – tenancy agreements, bank statements and annual mortgage statements. If you have a property portfolio, ensure your spreadsheet showing your assets and liabilities is current.
• Order a credit report to check your payment history - Checkmyfile covers multiple rating agencies.
• Find out about your current mortgage lender's lowest remortgage rates. Lenders like BM Solutions seem to charge higher rates to existing customers than new borrowers. 
• Ask a mortgage broker to search the market for the most competitively priced deal, Trinity Financial's brokers will assess the market, including niche lenders and private banks if you have a large amount of debt.