Can you release equity on a buy to let property?


Curious about whether you can release equity on a buy to let property? This article lays out your options and explains how to make the best decisions for your financial future.

Can you release equity on a buy to let property?

The short answer is yes, you can. That can be a big relief for landlords who want to raise capital without putting their first home at risk. The funds that are released are yours to use for whatever purpose you wish and, in some cases, receivable tax-free. However, there are a number of different strategies for releasing equity on a buy to let property – and it’s important to consider your options carefully.

What can you use the capital for?

There are no limitations regarding how you use the capital raised against a BTL property. That’s ideal if you are one of the many landlords in the UK who find themselves asset rich but cash poor. The capital you receive is yours to spend as you wish – whether that’s buying a new car, taking a holiday, paying a deposit on your next BTL purchase, boosting your retirement pot or anything else you have in mind.

What options are open to you?

There are a number of different ways that you can release equity on a buy to let property. That includes remortgaging, getting a further advance or taking out a secured loan. Let’s discuss each in a little more detail.

Can you release equity on a buy to let mortgage?

As the name suggests, this involves taking out a new mortgage on your BTL property. To release equity on a buy to let mortgage you must borrow enough to cover the balance of the property’s current mortgage (if there is one) plus the amount of capital you wish to borrow. For example, if you owe £75,000 on the mortgage and want to borrow £25,000, you would need to take out a new mortgage for £100,000 with a new lender.

Buy to let further advance

This is essentially an extension of your current mortgage, where your existing mortgage provider lends additional funds on top of your existing arrangement. For obvious reasons the application process tends to be reasonably straightforward, but interest rates can be high.

Buy to let secured loan

This option is completely distinct from your mortgage and involves taking out a loan with a new lender, using your BTL property as security. It’s a sensible option if you wish to keep your current mortgage arrangements as they are.

Additional options

There are several additional options that you could explore for releasing equity on your BTL property, including Equity Release lifetime mortgages. And of course, you could even choose to sell your BTL property to free up capital. The challenge is finding the option that makes the most sense for your personal financial circumstances.

Finding the best option

Every article you read on this topic will tell you the same thing. To make the best decision for your financial future, it really is advisable to seek the opinion of an expert. An independent financial advisor can sit down with you and talk you through the options that are available to you based on your particular financial circumstances and ambitions.
Here at Prydis we have been helping people make smart financial decisions and manage their wealth since 1991. For an informal chat about how we could help you – whether you would like to arrange a telephone consultation or a face-to-face meeting at one of our offices in London or the West Country – please get in touch.

James Priday

This article was written by James Priday

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