Is it still worth remortgaging?
Within the ever-changing Buy to Let property investment market, 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, lenders gain confidence to lend again and compete on mortgage rates, especially for Buy to Let mortgages. Some have reduced their rates to all-time lows.
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.
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.
Can you 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 enquired.
We would suggest you do this sooner, rather than later, for two important reasons.
Firstly, because of the current economic uncertainty from the apparent global slowdown, and 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, secondly, 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 2019. 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.