25 Jul Finding the Best Buy to Let Remortgage Product
Finding the Best Buy to Let Remortgage Product
Finding the best buy to let remortgage products is a job that a good and trusted broker can help you with (but maybe not find you the very best deal…read on). Normally these buy to-let remortgage products have the same or very similar terms and criteria as a mortgage for purchasing a property. In fact, some mortgage products are available for both purposes, whereas others are for either purchase only or remortgage only, but the criteria and terms will be very similar. The costs are also very much the same in terms of significant costs such as mortgage arrangement fees and early redemption charges.
What you should do is work out the equivalent monthly cost of the remortgage product over the period you are expecting to hold it for. I have found that mortgage brokers will give you a range of what they consider to be the best buy to let remortgage products for your situation. However, they don’t come along and say here is a range of suitable deals and here is the very best one of the lot because of A, B, C! Of course, that would be nice, and if we could fully trust the broker we are working with then a bit of blind faith would help here.
Instead, the reality is that you really need to do your own homework from the range of suitable ones that are offered to you. You need to compare the main terms, features and criteria associated with remortgage deals offered in order to find the very best buy-to-let remortgage deal for what you specifically want if for.
Note that the main terms, features and criteria associated with remortgage deals (discussed at length in the book All About Buy To Let Mortgages) are applicable to remortgaging. The defining difference between a mortgage and a remortgage is simply whether there is a change of ownership taking place during the conveyancing process when the loan is attached to the property for financial security. In the case of the purchase of a property then a change of ownership takes place; likewise, the same if you were to transfer from personal ownership of a property to limited company ownership.
However, as already covered several times before, one significant distinction between a mortgage to purchase and a remortgage is that it is based solely on a valuer’s market-value assessment, rather than also being influenced by an agreed purchase price, of which there is none. This also gives a certain amount of flexibility in the mortgage loan amount, subject to the agreement by the valuer that the market value of the property and the rental income valuation are realistic and acceptable for lending purposes. This aspect of valuation is very interesting and gives the investor the very thing needed to buy property No Money Down (or rather No Money Left In) on a deal.
The market value of a property for a remortgage will be established by the lender’s valuer who will base this on a range of actual sold prices of comparable properties (often shortened to simply comparables or even comps). Comparables are similar properties accounting for the size, location, type and condition of the property. All this information is available to a valuer on-line apart from, of course, the condition of the property; this aspect of the property condition, in particular, gives some degree of variation in the final valuation. In this way, although based on certain available facts, the valuation assessment is more of an art rather than an exact science and influenced significantly by the state of repair of the property.
It is required however that you state on your buy to let remortgage application what you think the property is worth, the valuer’s job is then basically to either agree with this or provide a different valuation. Typically, any difference to your valuation figure is more often lower than you stated, but it can be higher. You then will be offered the remortgage based on the value that the valuer has assigned to the property. For this reason, it is best to go in with your property valuation figure on the high side rather than the low side, although it should also still be realistic and justifiable.
If you go in too low it is likely that, if the valuer is of a conservative nature, then they will simply agree with you even though they might have otherwise valued it higher. If you go in with slightly too high a valuation figure, they then will simply assign what they actually think the property is worth, or they might even agree with you. In this way you will at least get the highest possible valuation from the valuer. If a higher valuation is important to you (and it is for pulling out the maximum amount of capital), then this could also be a definition of the best buy to let remortgage deal to you. Certainly, if the valuation is too low for purpose, it cannot in any way be considered as ‘best’!
After some time of investing in a specific area, you will get a good feel for what a property should value up at. This is because you will have had a lot of experience in going to view properties and comparing against what the asking prices are. You should also account for the fact that sale prices will typically be somewhat lower than the asking prices, although sale prices could also be higher than asking prices depending on the specific area. This feel will help you get the best buy to let remortgage deals based on valuation at least because it is pretty much up to you to define this (and get it accepted!).
Sold prices will eventually appear on-line on the various websites including that of the Land Registry of course. This can help you get a feel for the realistic selling prices against asking prices.
Assuming you have a mortgage on the property already, remortgaging soon afterwards with a different lender to the one you are with may well get you a more realistic valuation than staying with the same lender. If you remortgage with the existing lender they will have access to the details of some or all of the lending history and might feel your increase in valuation is not justifiable based on that information. However, with a new lender they will have no such information to consult and will therefore more likely make a valuation based on the true comparable information alone to establish a market value for the property.
I hope this helps you understand what to look out for in finding the best buy to let mortgage deals. More information on this is given in the book All About Buy To Let Mortgages, especially the section on Mortgages as this defines the features that are also used in defining the best buy to let remortgage deals.
AUTHOR’S NOTE TO READER: If you are reading this VIP Club Post from a Google search or social media link, you may be interested to see the additional information available on all aspects of using buy to let mortgages and alternative creative financing methods, written by an experienced investor to 100% finance his property portfolio purchase of 40 properties. For further information, you can visit the HOME page of this site and scroll down to see the full range of investor information available. Alternatively, get immediate access to both FREE and Paid-For High-Value additional information, including VIP support. The Author’s Best Selling BOOK on BTL Mortgages is available on Amazon, but the Special Modules are only available direct from this website). Investing a small amount of time and maybe money now can literally save you an unimaginable amount in the future! Don’t forget that. (When you click on any of the links above, use the back arrow on your browser to come back to this page, OR do right-click and select ‘Open link in new tab’ to keep this Post open.)