A residential home mortgage is one taken out on the property where you live. So, what happens when you are facing financial problems with your buy to let properties? One solution could be to remortgage your own home instead of taking out a mortgage for your rental property. There are various reasons why you might consider this route. One of the main ones is that rates on residential mortgages are generally lower than those on buy to lets. So is there a catch? Read on to find out more.
Residential Home Mortgage : A Dilemma for Buy to Let Landlords
If your buy to lets are not doing as well as you had hoped, one solution is to sell up and cut your losses. But, in the long term, pulling the plug could lose you more money. As a buy to let landlord you will most likely own your own home, as it is extremely difficult to secure a mortgage for a rental property if you don’t already own your own home. So, remortgaging your own home could allow you to clear the mortgage on your buy to let or reduce it to get a better deal or allow it to fit the new rental stress test calculations.
As you are no longer able to deduct interest on buy to let mortgages, taking out a second residential home mortgage or remortgage on your property could prove fruitful. Doing so would reduce monthly mortgage costs, when compared to a buy to let mortgage. Before you start however, ask yourself:
Can you Remortgage?
Before deciding to take this route, firstly it is advisable to reassess your buy to let mortgages. Tougher regulations are also making it harder to remortgage. Replacing debt with cheaper debt is not uncommon, and is frequently done by people adding properties to their portfolio.
Whether you can take out a mortgage on your own home will also depend on your personal income. Lenders will typically allow you to borrow up to four and a half times your income and for self-employed this will either be salary and dividends or salary plus share of net profit. This is where many people come unstuck, most especially those who are close to retirement age, or who are already retired. Being able to remortgage is only half the battle. The next question you need to ask yourself is if you will be able to offset the debt.
Residential Mortgage Advice from Mortgage Style Ltd
When assessing risks and remortgages, it is essential you talk to your independent advisor. Mortgage Style can look into your portfolio with you, and come up with the best solution. If you are unable to offset the debt, even if a second mortgage on your home is accepted, you will be no better off in the long run.
Our impartial advice is tailored to your individual needs. One solution does not fit all. As a buy to let landlord facing financial difficulty, contact us to discuss your worries. We can help you get things into perspective, and stop you from making hasty decisions that you may regret in the long run.
Source : https://www.telegraph.co.uk/Tags: Residential Home Mortgage
Categorised in: Mortgage Advice
This post was written by Marcus Robinson