The latest complex buy to let index from Mortgages for Business has shown that the first three months of 2013 have seen a massive increase in buy to let remortgage activity.
According to the index, 69% of all buy to let transactions between January and March were remortgages – a dramatic increase from the 43% figure seen in the last three months of 2012. This figure is the highest seen since Mortgages for Business launched the buy to let index in 2011; the previous peak was just 53%, between October and December 2011.
Research from the company showed that many landlords are taking advantage of high yields and expanding their businesses to improve their short-term income. The average yield at the end of last year across all property types (HMOs, multi-unit freehold blocks, semi-commercial properties and ‘vanilla’ buy to let properties) was 8.33%; the only property type to not see an increase this year was HMOs.
This may not be the only reason for the spike in remortgage activity, however; a report in the Sunday Times published on Sunday 7 April claimed that the under-valuing of rental income by surveyors is causing many buy to let mortgages applications to fail.
LSL Property Services have actually recorded marginal decreases in monthly rent, meaning that higher rental yields are likely attributable to increasingly competitive mortgage rates.
Buy to let remortgages
You should be careful when using a remortgage to release equity from your rental property, as it involves servicing additional debt. Be aware that your property could be repossessed if you cannot keep up your mortgage repayments.
If you are in doubt about your situation you should speak to a qualified mortgage adviser.