Remortgaging
Quick answer
Switching a mortgage to a new deal, either with the same lender (a product transfer) or a new one, usually when a fixed or tracker period ends. Landlords remortgage to avoid rolling onto the lender’s higher standard variable rate, or to release equity to fund another purchase.
At a glance
- Trigger
- End of fixed/tracker period
- Re-tested on
- Current value, rent and ICR stress test
Full guide
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Open full guideWhy Remortgaging matters for landlords
Remortgaging is where higher interest rates actually bite: a landlord coming off a cheap five-year fix can face a much larger payment and a fresh ICR stress test on today’s rates. If the property’s value has slipped or the rent has not kept pace, the achievable loan can shrink, sometimes forcing a cash injection or a sale. Planning the remortgage months ahead — checking value, rent and ICR early — is what separates a smooth switch from a forced decision.
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Official sources
LetCompliance editorial reviews this entry every quarter against the sources above. Always confirm specific duties with a qualified solicitor or your local council.
Related terms
Interest-Only Mortgage
A mortgage where the monthly payment covers only the interest, leaving the original capital to be repaid at the end of the term. Most buy-to-let mortgages are interest-only because it maximises monthly cashflow and, historically, the tax treatment of interest. The capital must still be repaid eventually — usually by selling or remortgaging the property.
Buy-to-Let Mortgage
A mortgage designed for a property bought to rent out rather than live in. Lending is assessed mainly on the rent the property will produce, not just the borrower’s salary, and most are interest-only. Deposits are larger than for a residential mortgage — typically at least 20–25% — and the interest is relieved only as a 20% tax credit under Section 24.
Consent to Let
Written permission from a residential mortgage lender allowing the owner to let out a home bought on an owner-occupier mortgage, without switching to a buy-to-let product. Usually granted for a limited period (often 6–12 months) and sometimes with a rate uplift. Letting without it breaches the mortgage terms and can, in principle, let the lender demand full repayment.
Interest Coverage Ratio (ICR)
The rental stress test buy-to-let lenders use to decide how much they will lend. It measures whether the rent covers the mortgage interest by a required margin — commonly 125% for basic-rate borrowers and 145% for higher-rate borrowers — tested at a notional stressed interest rate rather than the actual pay rate.
Loan to Value (LTV)
The size of a mortgage expressed as a percentage of the property’s value. A £150,000 loan on a £200,000 property is 75% LTV. Buy-to-let lending is usually capped around 75–80% LTV, and lower LTVs unlock better interest rates.
Rent a Room Relief
A scheme letting you earn up to £7,500 a year tax-free from letting a furnished room in your own home. The threshold halves to £3,750 if someone else (for example a partner) also receives income from the same letting. It applies to resident landlords with a lodger, not to a separate buy-to-let property.