Remortgaging - How to

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How to cut the cost of your mortgageDespite the ups and downs of the property market, investing in housing is traditionally considered to offer decent returns in the longer term.

Unless you’re a cash buyer, you’ll probably need a buy-to-let mortgage in order to become a landlord.

There are plenty of things to consider and calculations to make before diving in and beginning to build your property empire.

Who needs a buy-to-let mortgage?

How to be a landlordDon’t be tempted to try to save money by attempting to get a residential mortgage instead - even if your application were successful (which is unlikely) you’d be committing mortgage fraud and breaking the terms and conditions.

That could have dire repercussions, including the lender demanding that you repay immediately and in full.

Consent to let on a residential mortgage

Consent to let gives you permission to legally rent out your property, but usually only until the end of your current mortgage deal. After that you’ll be asked to take out a buy-to-let mortgage if you want to keep renting out your property.

There’s usually a fee for consent to let and sometimes your interest rate will be increased, too.

Income Tax CalculatorPeople who’ve got into buy-to-let this way are often called ‘accidental landlords’.

Types of buy-to-let mortgage

As with residential mortgages, buy-to-let products are initially either variable rate, such as a tracker, or fixed rate.

Remember, variable rates could change at any time, so if you’ve budgeted to make sure your rental income covers the mortgage payments, you may need to leave a particularly wide margin with a variable mortgage to make sure an interest rise doesn’t leave you struggling.

Standard variable rate (SVR)

If you want to repay your mortgage early or change products before the end of the initial term, you’re likely to incur early repayment charges.

After the initial term of your tracker, discounted or fixed mortgage ends you’ll be moved onto your lender’s standard variable rate (SVR) which, as the name suggests, can go up or down.

Holiday let mortgages

If you want to let out a property as a holiday home you can’t usually take out a standard buy-to-let mortgage on it.

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