Top 5 tips to help keep your Buy to Let mortgage payments down

Over the last year, there have been a lot of headlines around both the availability and affordability of mortgages, which began after the mini budget last year and have continued as the Bank of England has raised the base rate. But while it’s true that mortgage interest rates have increased, there are now plenty of products in the market once again and you can still secure both two and five-year fixed deals at sub-6%, with variable rates available significantly below that.

However, given that we are in a period of global economic uncertainty, not to mention a cost-of-living crisis, it’s important to make sure you aren’t paying more than you need to for your mortgage – either right now or when you come to refinance.

So here are five key steps we’d recommend considering to keep your Buy to Let mortgage payments down:

1. Check your current mortgage deal

The first thing to do is check your current deal and when it expires. If you’re on a fixed rate, you should be aware that the product is likely to default to a higher interest rate once the fixed term comes to an end, and you should be planning up to a year in advance of that.

2. Work out your current Loan To Value (LTV)

Although average house price growth is reported as slowing in some areas, capital values increased well on the whole during the pandemic and are still rising in many areas, year on year. So, if it’s been more than six months since you last had your property valued, you may find you’ve gained enough equity to make a difference to your current loan to value, which could open up some options on the mortgage front.

You may be able to get a good idea of the current value of your property by looking at similar ones currently on the market in the area, and you can search the Reeds Rains website by postcode and house type to find the most recent sold prices. But to get a more accurate, up-to-date valuation, just get in touch with your local Reeds Rains branch and we’ll be happy to visit the property and give you a tailored market appraisal. You can also book a property valuation online here

Once you know how much your property is worth, you can see how much equity you now have and work out the Loan To Value. Generally speaking, the lower the Loan To Value, the better rates you can access so, even with interest rates rising, you may be able to remortgage onto a product where your monthly payments are more manageable.

3. Have a 5 to 10-year finance plan for your Buy to Let

If you don’t already have a maintenance schedule for your Buy to Let, now is the time to put one together, so you know what your financial outlay will be over the coming years and can budget ahead. As well as your regular costs - such as the monthly mortgage payment, annual gas safety check, an allowance for minor repairs, insurance and admin costs – you need to factor in the larger periodical jobs, which include: redecorating, replacing furnishings and appliances, repairs to the fabric of the building and refitting bathrooms and kitchens.

Importantly, it’s likely that the minimum EPC rating to legally let a property will rise to ‘C’ sometime between 2025 and 2030, so if your property is currently rated ‘D’ or ‘E’, you need to find out what works are required to improve energy efficiency.

Knowing how much capital will be required and when, means you can plan ahead to make sure you’ll be able to finance your Buy to Let into the future. And if you’re not sure you’ll be able to set aside sufficient funds out of rental profit or other income, you may be able to look at releasing equity to help cover these costs.

4. Speak to a broker

Once you know the property’s current value and have an idea of how much it’s likely to cost you to run over the next five years, the next step is to speak to a mortgage broker. While it’s certainly possible to arrange a mortgage directly with a lender, when it comes to Buy to Let, a huge number of products are ‘intermediary exclusives’, meaning you can only access them via a broker. So, even if you think you’ve got a good deal with your current lender, it’s always advisable to talk though your circumstances with a buy to let mortgage specialist who can access a wide range of products in the market.

They will be able to discuss the options available to you now and in the future and help you make a decision on what action to take – such as whether it might be appropriate to remortgage sooner, rather than waiting for your current deal to expire.

And, depending on how much equity you have in the property, you may choose to release some of it to help pay for rising costs or work on the property - or you may decide to reinvest it elsewhere. A broker can go through all the costs and financing options so you can get a clear picture of how the next few years could work for you mortgage-wise.

5. Review your mortgage every 6 months

Once a mortgage has been arranged, many landlords don’t think about it again until their deal is coming to an end. But we’d suggest it’s worth reviewing it every six months with a broker, for two key reasons:

1. New products usually come to the market every quarter and, even if you’re on a fixed deal, a better option might become available at some point that makes it worth switching. This is certainly something to keep an eye on over the next couple of years, as the bank base rate changes.
    
2. If you choose a Buy to Let mortgage through our partner Embrace Financial Services you will reminded well in advance of your current deal expiring and can take the time to discuss options and the best course of action.

If you’d like to talk through your mortgage options with a specialist broker, you can get in touch with our partner, Embrace Financial Services at any time via our website.

With Embrace Financial Services, you can book a fee initial mortgage appointment either over the phone or face to face.

Book a mortgage appointment today