Remortgaging could potentially save portfolio landlords £8,500, while failing to do so could result in additional costs of up to £23,000.
In a recent analysis, Alasdair McPherson, head of partnerships at Rangewell, a specialist property finance expert, has warned that lack of research or professional funding support could lead to portfolio landlords falling into legacy rates, potentially costing them thousands of pounds annually.
The research reveals that portfolio landlords who remortgage onto current lower buy-to-let (BTL) rates can potentially save up to £8,563, as compared to allowing their mortgage to revert to a standard variable rate (SVR) after the end of a two-year fixed term. This significant saving is due to the decrease in interest rates on new fixed deals compared to SVRs.
Failing to refinance could result in a monthly mortgage cost increase of over £970 for portfolio landlords, according to the same research. Over a renewed two-year term, this could amount to an additional cost of £23,270.
The average portfolio landlord holds 8.6 BTL properties financed across 5.8 loans, with a total BTL mortgage borrowing of £503,680. Failing to refinance could result in an average mortgage rate of 7.09%, pushing the monthly cost to £2,976, a stark contrast to the current average rate for the same mortgage type, which has fallen to 3.93%.
With the right approach, landlords can access rates on par with standard BTL in the HMO sector, delivering substantial savings and enhanced portfolio returns. A growing number of lenders are actively open to well-managed holiday let portfolios, offering opportunities for refinancing and equity unlocking.
Multi-unit freehold blocks (MUFBs) remain a "lender sweet spot", especially where five or more self-contained flats sit under one title. Lender appetite for mixed-use portfolios, including flats above retail, has increased substantially. Overseas landlords with UK property portfolios can now access competitive terms from more lenders, allowing them to reposition their portfolios more profitably.
The mortgage market has moved in favor of portfolio landlords, but the gap between best-in-market rates and legacy rates is wide. With the right rent roll and valuation evidence, refinance terms for MUFBs can be secured close to standard BTL terms, even at scale. Refinance terms and rental yields in the holiday let portfolios sector are often better than those available to pure residential portfolios.
Lender appetite is especially strong in the HMO sector, particularly for professional and student HMOs where rent-to-loan coverage is robust. Foreign investors with UK property portfolios can now access competitive terms from more lenders, allowing them to reposition their portfolios more profitably with mainstream or specialist lenders.
By refinancing, portfolio landlords can significantly improve their cash flow and reduce costs, while those who fail to remortgage risk a sharp increase in costs associated with the reversion to a higher standard variable rate. It is therefore crucial for portfolio landlords to consider their remortgaging options carefully to secure the best possible deals and maintain the profitability of their investments.
- For portfolio landlords, remortgaging onto lower buy-to-let rates instead of allowing their mortgages to revert to a standard variable rate could potentially save them up to £8,563 annually.
- Failing to refinance could lead to a monthly mortgage cost increase of over £970 for portfolio landlords, amounting to an additional cost of £23,270 over a renewed two-year term.
- With the right approach, landlords can access rates on par with standard BTL in the HMO sector, delivering substantial savings and enhanced portfolio returns, making it crucial for portfolio landlords to consider their remortgaging options carefully to secure the best possible deals and maintain the profitability of their investments.
