Remortgaging buy-to-let properties could re-ignite rental yields, Charcol finds

Remortgaging rental portfolios could reverse the recent dip in buy-to-let property yields for many landlords, Charcol has said.

14:08 12 January 2005

Remortgaging rental portfolios could reverse the recent dip in buy-to-let property yields for many landlords, Charcol has said.

By shopping around for the best value mortgage, landlords could save as much as 25 per cent on repayment fees, the mortgage broker has revealed.

Savings of between 1,500 to 2,000 a year could be made from moving mortgages away from a lender's standard variable rate to a market leading product, Charcol explained.

"Yields have fallen over the last few years as a result of rising property prices, a moderate rise in interest rates over the last year and modest falls, until recently, in rental income, making it even more imperative for landlords to ensure they have the best possible mortgage," said Ray Boulger, Charcol's senior technical manager.

"Several deals currently available can significantly reduce the amount of interest many landlords are paying and buy-to-let mortgages will get even more competitive this year," he added.

Charcol's latest buy-to-let report found evidence of tougher market conditions for landlords in 2004.

But things are set to improve in 2005, with interest rates likely to fall and the housing market stabilising.

"Our report suggests that yields will edge up this year, when we expect interest rates to show modest falls," explained Mr Boulger.

"In the meantime, landlords must protect themselves from the negative effects of high gearing by ensuring they get the maximum return from their rental properties. Taking the time to review existing arrangements could prove incredibly beneficial and we urge all landlords to do just that."