It will be important for any property investor and especially those with portfolios of investment property to be certain to ensure that they are obtaining the best financing rates they can. This generally means keeping check on your mortgage fixed rate ending dates and checking that the interest rates you are paying are as good as they can be. If you are not getting the best interest rates then you need to look at this and make the necessary arrangements.
Keep in mind though that the lowest rates do not always give you the best deal when re-mortgaging your property as other costs such as lenders arrangement fees will come into play. Some things to consider.
- Interest Rate – Investors will want the lowest rates but their are other factors such as fixed rate periods that can affect your decision. For example, if you believe that interest rates will rise in future then opting for long fixed rate periods may be an advantage.
- Repayment method – Interest only mortgages used to be the norm for investment property finance but lenders criteria has been changing and repayment mortgages where the loan reduces to zero over the mortgage term are becoming more common.
- Mortgage tie in period – Most mortgages will have a fixed period where the interest rate will remain fixed during that period. Fixed rates are generally between 2 and 5 years but 10 year fixed rates are not uncommon. Having your rate fixed during periods of high volatility can give the investor peace of mind knowing that their costs are fixed.
- Investment Property Portfolio building – Investors can use re-mortgaging of their existing properties to free the equity they have in their portfolios and use that capital to fund the deposits on additional purchases.
- Improvements to Investment Property – In the same way as shown above, equity can be released on an individual property or a property portfolio to raise capital for carrying out maintenance work to your properties.
- Obtaining re-mortgage finance – There are many lenders out there offering literally hundreds if not thousands of individual mortgage products and it is important that you seek advice from suitably qualified brokers to ensure you obtain the best deal for your needs.
- Secured lending – Where smaller loans are required or where you are unable to re-mortgage due to tie in dates not matching, opting for a loan secured as a second charge on your property may be the answer. Rates will inevitably be higher than a re-mortgage but may still provide the best solution overall.
- Lenders fees – Different re-mortgage products will have different lenders fees and these need to be taken into consideration when comparing mortgages. Generally it is best practice to engage with a mortgage broker who is experienced in your area of property transaction.
- Solicitor and conveyancing – Your lender may offer you their free legal service when re-mortgaging you may not require to engage a solicitor.
- Buildings insurance – When re-mortgaging a property, always check your buildings insurance to make sure that it still provides the cover you need. Note, some insurers offer special cover to property investors where void periods in your rental can be covered.