When to remortgage an SPV BTL
Three common SPV remortgage triggers:
- End of fixed-rate period. Most SPV BTLs are on 5-year fixes. Six months before the fix expires is the right time to start the remortgage conversation — gives the broker time to find the best deal and avoid your loan dropping onto the lender's standard variable rate (SVR), which is usually 2-3% higher than a new fix.
- Capital raising for new acquisitions. Property values typically rise faster than the mortgage is paid down, so the SPV builds equity over time. A revaluation + remortgage releases that equity as a tax-free cash withdrawal for the SPV (it's borrowed money, not income).
- Better rates available. If you're 2 years into a 5-year fix and rates have dropped enough that the saving outweighs the early repayment charge, refinancing early can make sense — but the ERC profile matters (see below).
Capital raising on revaluation
If a property has appreciated, the lender's new valuation lets you borrow more against it. Example:
- 2021 purchase price: £200,000
- Original mortgage (75% LTV): £150,000
- 2026 revaluation: £270,000
- New 75% LTV mortgage: £202,500
- Equity released = £202,500 - £150,000 = £52,500
The released £52,500 is a loan to the SPV, not income, so it's not subject to corporation tax or your personal income tax. The SPV can use it for the next deposit, refurbishment costs, or distribute as a dividend (subject to dividend tax on extraction).
Underwriting consideration: the rental must still cover the new higher mortgage payment under the lender's stress test. If the property's rent hasn't grown in line with the value, your remortgage may be capped below 75% LTV. Standard advice: check actual market rent against rental cover formulas before committing to the remortgage strategy.
Switching lenders vs product transfer
At the end of a fixed-rate period, you have two options:
Product transfer (PT)
Stay with the same lender, just move to a new product. Lender doesn't re-underwrite, no new valuation needed (usually), faster process (1-3 weeks). Useful if: rates are similar across lenders or your circumstances have weakened (rental income fall, portfolio stress, missed payments) since the original underwrite.
Switching lender
Move the loan to a different lender. Requires full re-application: new valuation, full underwriting, conveyancing fees. 6-10 weeks typical. Usually worth it if: a different lender's rate is materially better, you want to capital-raise (current lender won't lend more), or current lender's reversion rate (SVR) is high.
A specialist broker should price both options and recommend the right one. Common mistake: defaulting to a product transfer because it's easier, when switching would save several thousand pounds over the new fixed term.
ERC traps to avoid
Most SPV BTL fixed-rate products include an Early Repayment Charge (ERC) that tapers over the fixed term — typically 5% in year 1, falling 1% each year (5/4/3/2/1 on a 5-year fix). Refinancing during the fixed term means paying the ERC on the loan balance, which can be material.
Example: refinancing a £200k mortgage with 2 years left on a 5-year fix (so 3% ERC at this point) costs £6,000 in ERC alone. The new product needs to save more than £6,000 over the remaining fixed term plus the rate of the new fix to make sense.
The ERC trap: being persuaded by a "better rate" to refinance early without modelling the ERC. The right calculation is total cost over the remaining fixed term — old rate × balance × remaining term, vs ERC + new rate × balance × new term. A broker should run this number; if they don't volunteer it, ask.
Documents required for SPV remortgage
For a remortgage you'll need most of the same documents as the original purchase, plus:
- Last 2 sets of SPV annual accounts (or a director's statement if year 1)
- Last 2 corporation tax returns (CT600s)
- SPV bank statements — 6 months
- Director personal bank statements — 3-6 months
- Existing mortgage statement (showing balance and outstanding term)
- Existing property's rental agreement or recent tenancy
- EPC and EICR (electrical safety) — both required by most lenders
- If capital raising: a clear use of funds (e.g. "to deposit on next BTL purchase")
Common reasons SPV remortgages get declined
- Rental cover ratio (RCR) below threshold. Rent hasn't kept pace with the new loan amount. Solution: cap the new loan at the maximum RCR-compliant level, or accept a lower LTV.
- Portfolio stress at lender's overall portfolio limits. Some lenders cap total portfolio exposure (e.g. no single lender holding more than 50% of your portfolio). Spread mortgages across lenders to avoid this.
- Director income reduction. If director income has fallen since the original underwrite, lenders may decline. Solution: pick a lender that focuses on rental coverage rather than personal income (Foundation, Kent Reliance).
- SPV accounts overdue. If your SPV's most recent accounts at Companies House are overdue, every lender will decline. Make sure your accountant is on top of filings.
- Recent missed payment on personal credit. Even a single late credit card payment in the last 6 months can trigger decline at high-street lenders. Specialist lenders are more flexible.
- Property issues at valuation. Down-valuations are common in slow markets. Solution: ask the broker which lenders have been valuing strongly in your area recently and start there.