It’s usually a good idea to remortgage your property before the end of a fixed rate deal to prevent being switched onto your lender’s higher Standard Variable Rate. However, you can also remortgage to release equity from your property as tax-free cash and this is a popular way to borrow. In this guide, we’re going to discuss how to release equity from a Buy To Let property. If you are looking to release equity from your primary residence to purchase a Buy To Let property, please read our guide, ‘Can I Remortgage to Buy a Second Property?’
If you’re already a landlord and you’re thinking of releasing equity from one of your investment properties, this guide will help you understand what your options are and how it all works.
Can I Release Equity From a Buy To Let Property With a Remortgage?
Plenty of lenders allow landlords to release equity from one or more investment properties to be used for many different purposes. You’ll need to have sufficient equity in your property, with most providers allowing you to borrow up to 75% of the property value. You’ll also need to pass your lender’s affordability and credit checks. The amount of equity you’ll be able release and the interest rate you’re offered can vary widely from lender to lender, so it’s important you speak to a specialist Buy To Let mortgage broker to see what options are available to you before applying.
Why Do People Release Equity From a Buy To Let Property?
Landlords release equity for a number of different reasons – from business to personal to lifestyle. Lenders will want to know what you plan to use the money for, but some are extremely flexible as long as you pass their eligibility checks. Let’s have a look at some of the most common reasons for releasing equity from a Buy To Let property.
Buy Another Rental Property
One of the most common reasons for landlords to release equity is to raise a deposit for a new Buy To Let property. Taking advantage of the equity that’s built up in your current properties could allow you to grow your portfolio faster.
Fund Property Improvements
Releasing equity by remortgaging can be a cost-effective way to fund necessary repairs or improvements to your property. This could also be a savvy move if the average rent is increasing in your area, as upgrading your property may allow you to charge more.
Personal & Lifestyle
Many lenders will let you borrow for a range of personal and lifestyle reasons as long as you pass their affordability and credit checks. This could be to fund holidays, a wedding, buy a new car, make home improvements, or gift money to relatives.
Could I Use Equity Release to Release Equity From My Buy To Let?
If you are at least 55 years of age and you own a Buy To Let property in the UK worth £70,000 or more, you may be eligible for Equity Release. The newer type of Equity Release is called a ‘Lifetime Mortgage’, which allows you to release up to 60% of your equity as tax-free cash whilst still owning and benefiting from your Buy To Let property. With a Lifetime Mortgage, the interest you owe can roll up into your loan, so this could be a better option if wish to release equity without having to worry about monthly repayments. For most Lifetime Mortgages, you don’t have to pass affordability or credit checks, so if you may be eligible even if you are unable to get a traditional remortgage. To work out whether Equity Release could be a better option for you we would need to chat through your specific circumstances and goals during your FREE no-obligation consultation. In the mean time, you can learn more about this option by reading our guide, ‘Can I Release Equity From a Buy To Let Property With Equity Release?’
The Bottom Line
If you’ve built up a reasonable amount of equity in your Buy To Let property, you may be able to release some of it as tax-free cash by remortgaging. You can use the equity you release for many purposes; such as to buy a new rental property, fund repairs and improvements, consolidate debts, or for personal or lifestyle reasons. Providing you can afford the repayments and you have a good credit score, you should have plenty of deals available to you – but the amount you could borrow and for what interest rate can vary widely between lenders. Alternatively, if you are eligible, you may want to consider Equity Release instead of a remortgage, and our experienced mortgage and Equity Release advisors can help you make the right choise based on your situation.
We’ve been helping our local community release equity with remortgages for over 30 years! We can search thousands products to find you a great deal that suits your needs perfectly. We’ll also guide you through the process and liaise with your lender and solicitor to ensure the process goes smoothly for you.
Book your FREE no-obligation consultation with one of our friendly advisors to get going quickly. We have offices in Frimley and Basingstoke, or we can help you remotely via phone or video call if you’d prefer. We look forward to chatting with you!
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Think carefully before securing any other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage.
Equity Release includes Lifetime Mortgages and Home Reversion Schemes. We can advise and arrange Lifetime Mortgages and will refer to an approved specialist for Home Reversion Schemes.
Lifetime mortgages are only applicable to 55+, entering into one may affect access to state or means tested benefits and the inheritance you may leave.
The Financial Conduct Authority does not regulate some forms of Buy to Lets.
