Buying a second property can be a great decision, as you can rent out the property while you live in the other, making remortgaging a great way to build your wealth.
How Does Remortgaging Work? What Do You Need to Consider?
Remortgaging can be a great way to make those monthly payments go a little further as you can potentially benefit from securing a better mortgage rate, so if you want the property you’re living in to be a bit more profitable, it’s a smart idea to consider remortgaging.
However, how much do you really know about remortgaging? The fact is that remortgaging can potentially save you money if you find a product with a lower rate.
When considering remortgaging a property, there is a lot to take into account: the current rate of interest on your mortgage, the term of your mortgage, the time remaining on it, the fees and commissions, the lending requirements, and more.
Here is a list of important factors you need to take into account:
- Equity;
- Credit history;
- Affordability;
- Personal circumstances;
- Types of property;
- and more;
Different Ways to Remortgage to Buy a Second Property: What are Your Options?
When it comes to remortgaging, there are numerous lenders who offer loans to people in a variety of situations. However, not all of them are exactly the same. Here are your options:
Buy-to-Let
BTL loans are common in the United Kingdom, as they allow people to purchase a property that can be rented out. These types of loans can be beneficial for the borrower, depending on circumstances due to tax credits landlords may qualify for.
Let-to-Buy
Let-to-buy loans are different from normal buy-to-let in that you are already renting out the property you want to buy for an agreed upon amount of time, and once it has passed, you can move into the property. The money from that rental is used as a deposit on the property.
Holiday Lets
Holiday let mortgages allow the borrower to invest in a property that can be rented out to holidaymakers, vacationers, and business professionals. The money from this rental is then used to pay off the mortgage.
Second Home
Second-home mortgages are just like the holiday let mortgages, except you’re getting another property in order to use it as your second home! This is usually a property that can be rented out to generate income, which is then used to pay off the mortgage.
Investment in Commercial Property
A commercial mortgage is often a loan that is used to purchase an income-generating property. This property can be a hotel, a shop, a pub, an office building, or a factory. This type of mortgage allows you to pay off the mortgage with the income the property generates.
The Bottom Line: Exploring Your Options and Opportunities When Remortgaging for a Second Property
While remortgaging provides a lot of options, it is important to choose the one that works best for you. Each scenario will have its benefits and drawbacks, and the one you decide to go with will depend on your personal circumstances.
As a general rule, the more you want to do with your property, the more you’ll have to pay for it. This means that if you want to buy a second property you’ll have to apply for a mortgage that is suited to your specific needs.
Are You Looking for a First Time Home Buyer Loan?
If you’re looking for a loan and you’re a first-time homebuyer, you’re in the right place. A Move Brokers has some of the best mortgage brokers in the UK, so get in touch with us to see how we can help you unlock the home of your dreams.
This article is for information only and should not be seen as advice or a recommendation to act. As a mortgage is secured against your home or property, it may be repossessed if you do not keep up the mortgage repayments.