With the crash of the housing market a couple years back there was another type of property development that went with it. Banks have decided to allow a special type of mortgage known as buy to let mortgages since the middle of the 1990s. These loans are intended for properties the buyers would like to rent out, and the amount of the repayments is based upon what the expected rental income from the property rather than the income of the buyer. For a period of time, these loans lost popularity, and it was difficult to obtain one. However, banks are once again starting to make some buy to let loans, and allowing property owners to also have a buy to let remortgage as well. I found this article Geld Lenen Met BKR written in Dutch.
A buy to let remortgage can now be used to refinance an original mortgage and take advantage of a better interest rate as well as payment terms, or when the owner is trying to grow their portfolio by financing another property purchase.
While being able to find a buy to let mortgage is not as simple as it use to be, there are still several lenders who are willing to give them if the credit score is high enough for that property owner. What makes it even easier is if the property is currently rented, and the owner can offer proof of the current income being generated by the property.
Repayment terms for buy to let remortgages can be set up so that the owner is required to pay only the interest due each month or as a full repayment loan. The terms that will best suit the owner differ among different portfolios and different owners.
In general, the key criteria that banks look at when making a decision on a buy to let remortgage is whether or not the property can produce income equal to 125 percent or more of the interest that will be due on the loan each month. There’s a good chance that the loan will be approved if the answer is yes.
Using a buy to let remortgage to fund the purchase of another property can be a smart business decision. When you do that, the property that is already mortgaged stays as the only one at risk if there is any problem repayment of the loan. It is also easier to handle a single loan payment each month than to worry about separate payments for separate properties.
The greatest advantage that comes with a buy to let mortgage or remortgage is the income from the second property should be sufficient to take care of the bulk of the loan payments. Depending on what one does for a living, other sources of income may not necessarily be enough to even come close on loans for properties of any size.
Property might have to dedicate some time and research to locating a buy to let remortgage. It’s worth the effort, however, if one would like to refinance their current buy to let mortgage to benefit from term changes or to pay for a new purchase without putting the new property at risk. It may also be easier to get a buy to let remortgage for a purchase than to get an original mortgage on the new property.
