Many landlords are sitting on a valuable asset: equity. As property values have risen, so has the potential to unlock cash through refinancing.
According to recent data from UK Finance, landlords with a small portfolio can release substantial funds annually by refinancing existing properties. That capital could be used to expand your portfolio, upgrade properties, or simply provide more financial flexibility.
What is refinancing and how does it work?
Refinancing means switching your existing mortgage to a new deal, often with a new lender, better rate, or revised borrowing terms. As your property increases in value, so does the amount of equity you can release.
For example, a property valued at £200,000 with an outstanding mortgage of £90,000 could be refinanced with a new mortgage at 75% loan-to-value. That would allow you to borrow £150,000 and release £60,000 in equity. Multiply that across two or more properties, and the potential becomes clear.
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Why refinance in 2025?
There are three major reasons landlords are choosing to refinance this year. First, capital values have gone up in many areas, which means there’s more equity available. Second, mortgage rates are starting to settle after a period of volatility, offering more choice for borrowers. And third, tenant demand is holding strong, helping to maintain a healthy rental income stream.
If your fixed-rate mortgage is coming to an end or you’re currently on a variable rate, refinancing could reduce your repayments or allow you to invest further.
What can you do with released equity?
Equity isn’t just a number on paper. When released, it can open doors. Some landlords use it to buy another property. Others put it toward renovation work, helping to improve rent levels or attract better tenants. You could also use it to clear debts, build a financial buffer, or explore new investment options like off-plan or energy-efficient homes.
Unlock value in your existing homes
Selling isn’t the only way to generate value. Refinancing allows landlords to hold onto appreciating assets while freeing up capital for the next step. It’s a useful strategy after a property’s value has increased significantly, or if you’re planning improvements to enhance yield.
Some landlords also refinance as part of a wider portfolio review, shifting focus to properties with better long-term prospects.
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How refinancing can improve your yield
Refinanced funds can be reinvested in ways that enhance property performance. For instance, improving insulation and heating systems to meet EPC C standards can reduce running costs, attract energy-conscious tenants, and justify higher rents.
In one Martin & Co example, a landlord raised monthly rent from £750 to £900 following a £20,000 refurbishment. That improvement was funded through refinancing and led to better tenant retention.
Risks to consider before refinancing
Refinancing can be powerful, but it’s not risk-free. You’ll need to check for early repayment charges on your current mortgage, consider whether the new interest rate is competitive, and ensure your debt levels remain manageable.
It’s also important to be confident in your rental income. A good mortgage advisor will help you weigh these factors and choose the right deal for your goals.
Consider your long-term strategy
Accessing equity isn’t just about funding your next project. It’s about planning for the future. Many landlords use refinancing to stay ahead of regulation, improve tenant satisfaction, and adapt to changes in demand or tax.
By building in financial flexibility now, you can stay responsive, whatever the market does next.
When is the best time to refinance?
The best time to refinance is when your property has gained value, your mortgage deal is ending, or you have a clear investment plan for the equity you release. In 2025, interest rates are showing signs of stabilising, making this a timely opportunity for many landlords.
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Final checks before applying
Before starting a refinance application, make sure you’re ready. That means reviewing your latest mortgage statements, getting an up-to-date valuation, confirming your rental income, and noting any recent improvements.
Lenders want to see well-run properties with reliable income. A good track record helps you secure the best terms.
How Martin & Co can help
At Martin & Co, we support landlords every step of the way. Understand your refinancing options and connect with trusted mortgage brokers who specialise in buy-to-let finance.
