Is it still worth considering re-mortgaging or is it too late?

Posted 6/04/2016 by: Reeds Rains

Within the ever-changing landscape of property investment, the one constant over the last six years has been that the Bank of England base interest rate has remained at an all-time low of just 0.5%. 

With this low cost of borrowing, as the property market has improved over the last few years, we’ve seen lenders gain the confidence to lend again and compete heavily on mortgage rates, especially for Buy to Let mortgages. Some have reduced their rates to all-time lows and we currently have offers from lenders as low as 2.1% for a two-year fixed-rate deal - even at 85% loan to value - with a £199 lender’s arrangement fee.1 

Given the increases in taxes and costs for landlords announced in recent Budgets, hopefully you’ve already taken steps to make sure your properties are generating the best possible returns. From a mortgage perspective, it’s possible to increase your returns in two ways. 

If you currently own your Buy to Let with cash, you may well be able to increase your earnings from property by taking out a mortgage and re-investing the money in one or more additional properties. Alternatively, if you already have mortgage borrowing, check with us whether we can reduce the costs or help find products that better suit your investment objectives. 

Is it still possible to reduce your mortgage costs? 

Even if you have already re-financed and reduced your mortgage costs in recent years, it’s still worth checking regularly whether there are better deals available, especially given the changes to taxation that are being implemented this year and next. Mortgage lenders tend to review their offers on a three-monthly basis, so a more suitable product might have become available since you last inquired. 

We would suggest you do this sooner, rather than later, for three key reasons. Firstly, because of the current economic uncertainty from the apparent global slowdown and, secondly, because of the new rules and regulations from the European Union that mean UK lenders will now make a distinction between Buy to Let as a pure business investment and Buy to Let from a more ‘consumer’ perspective, with the latter being regulated. For example, if you let out a home to move abroad temporarily or couldn’t sell your home and had to let it out to enable you to buy your next home, you are likely to have to take out a regulated Buy to Let mortgage product, which gives you a level of consumer protection.

And, thirdly, there is the likelihood that interest rates will rise at some point in the not-too-distant future, which may push up mortgage rates. The base rate was expected to increase from its historic low of 0.5% last year, then this year; now the financial forecasters have pushed that expectation back to 20192. While that is still some time away, it’s advisable to keep checking regularly what’s on offer, so that you can make sure you’re always on the best possible mortgage deal for your circumstances. 

These three factors are, individually, let alone together, good reasons to act now, so book a free initial appointment with our award-winning Reeds Rains mortgage service and find out how we could help you. If nothing else, it will give you peace of mind that you are maximising your returns. 



Our initial mortgage consultation is free. We will charge a fee between £349 and £699 on application. The amount we will charge is dependent on the amount of research and administration required.

The Financial Conduct Authority does not regulate some forms of Buy to Let.

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