Expand Your Buy to Let Portfolio With a Remortgage
Savvy landlords know that one of the best ways to expand their investment property portfolios is by taking advantage of the opportunity to remortgage the properties they already own. If you have equity in your current investment properties, whether as a result of paying down the principal of the current mortgage or through property value increases, you can put that money to work to purchase new properties.
Tapping into current property investment via a remortgage is the perfect solution to get the funds necessary to place a deposit on purchasing new buy to let properties. When you finance a buy to let property, you'll likely need to have 15 percent of the purchase price in cash to use as a down payment. While you might not have this much money lying around, it's certainly possible that the equity in your current buy to let holdings can total that much, or even more.
Some lenders that specialise in the buy to let market actually allow estate investors to combine all of their holdings into a single account, allowing for property values to be looked at in aggregate when determining funding eligibility based on loan to value accounts. In some cases, landlords with impressive portfolios with significant equity can utilise remortgaging to completely fund the purchase of new investment properties.
When you want to add to your buy to let portfolio, it's a good idea to explore the remortgage options available to you before investigating additional options for getting the money you need to fund the purchase of additional properties. It only makes sense to put your property equity and appreciation to work for you so you can accomplish your goal of building your buy to let portfolio.
What Type of Mortgage Looks Favorable for the Buy-to-Let Investment Portfolio?
According to the Council of Mortgage Lenders, the number of fixed rate buy-to-let mortgages being acquired has decreased somewhat from previous months. In fact, the Council of Mortgage Lenders states that approximately a 20 percent decrease in fixed rate mortgages has been evidenced over the six months spanning between July 2007 and January 2008. The popularity of the fixed rate mortgage for the buy-to-let investment portfolio is waning due to the promised potential of lower interest rates in general now and in the near future.
Recent mortgage acquisitions in the buy-to-let area have increasingly been taken in the variable rate mortgage offerings. This confidence that interest rates will continue to fall as the economy continues to fluctuate from good to bad could be reason enough to consider variable rate mortgages rather than fixed rate loans. After all, lower interest costs on a buy-to-let mortgage equates to a greater savings for the investors with smaller monthly mortgage payments as well as a more profitable margin.
A worsening of the economy on the heels of the credit crunch is the likely culprit for falling interest rates. The impact of the credit crunch can be felt in many areas of the economy. While the availability of credit has been greatly reduced over the last few months, the promise of lower rates could be enticing enough to keep some buy-to-let investors in the market with fresh eyes for new prospects.
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