What's The Safest and Cheapest Way To Fund A Buy To Let Property? Why Remortgaging Of Course!

The buy to let industry has been booming over the past two decades, and many people have made a lot of money in it. However as we all saw over the past three years, the markets crash and so the buy to let boom was thought to be dead.

Many landlords treated buy to let property as a 'get rich quick' scheme and so anyone considering property as an investment should be cautious. Although many investors had their fingers burned, many continued to generate income and capital growth from their portfolio.

Whilst it may not be as booming a market as it was in the early 2000s, buy to let property still offers excellent opportunities to make money. However, if you are planning to remortgage your own home to fund an investment purchase, or you plan to refinance existing investment properties to expand your portfolio, it is worth bearing in mind the mistakes made by many over recent years.

It is no surprise that many people fell into the trap when it was common for newspaper articles, television programmes and books to talk about how easy it was to make money by borrowing money against your own property to fund a buy to let. The problem was that people were careless and borrowed more than they could afford to repay.

So, if you are planning to remortgage your own home or other investment property to build your portfolio, how can you avoid these mistakes? Firstly, it is important to realize that the rental market is like many other markets in that it will have both good and bad periods.

It is a good idea to save some of your profits so that in harder times you have some backup funding. This will help you to avoid instances of being unable to pay the mortgage repayments.

It's also important to know your tenant market. Lots of landlords relied heavily on young professionals during the last boom whilst many landlords may now face problems with their business if they have concentrated on the student market.

Over forthcoming years, many students may cancel their plans to go to university when faced with thousands of pounds worth of tuition fees. Landlords in student areas may therefore suffer from a lack of demand as there will be fewer students searching for property in university towns.

It is vital that you don't look at a buy to let property as a 'get rich quick' scheme. The profits will come slowly, but the property is that asset that is increasing in value over time.

Always remember too that not only is your buy to let property at risk, so is your own home. Losing your home can be devastating and can severely affect your opportunities for credit in the future, so you may find it very difficult to obtain credit or a mortgage in the future if you don't keep up with repayments.


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Timothy Frodsham writes for JustRemortgages.com one of the UK's top sites for the latest remortgage rates and best remortgage deals.