Buy to Let Remortgage Guide 2026: Product Transfer, Stress Tests, and Section 24

With hundreds of thousands of buy-to-let mortgages rolling off fixed-rate deals in 2026, the remortgage decision has rarely been more consequential for landlords. Rates are significantly higher than the sub-2% deals secured in 2020-2022, and the additional layers of Section 24 tax changes and tighter ICR stress tests have made the process more complex than a simple rate comparison.

Product transfer vs full remortgage: which is better?

ICR stress test: how lenders assess BTL affordability in 2026

BTL mortgages are assessed on rental income coverage, not personal income (unless top-slicing applies). The Interest Coverage Ratio (ICR) test works as follows:

1. Step 1 — Stressed rate: The lender applies a notional stress rate (typically 5.5-7.0% in 2026), not the actual deal rate. This rate is applied to the loan amount to calculate a monthly interest figure.
2. Step 2 — ICR multiplier: Basic-rate taxpayer: rental income must be at least 125-130% of stressed monthly interest. Higher-rate or additional-rate taxpayer: 140-145% required (to allow for Section 24 tax impact).
3. Step 3 — Pass/fail: If the rental income meets the threshold, the mortgage is affordable. If not, the loan amount must be reduced until it passes, or top-slicing may be available.
4. Example: £200,000 loan, 5.5% stressed rate = £917/month interest. At 125% ICR: minimum rent £1,146/month. At 145% ICR: minimum rent £1,330/month.

Section 24 and its impact on remortgage borrowing

Section 24 of the Finance (No.2) Act 2015 restricts mortgage interest relief for individual (personal-name) landlords to the basic-rate tax credit only. The effect on remortgage borrowing:

• Higher-rate taxpayers can no longer fully deduct mortgage interest from rental income — they pay tax on rental income before mortgage costs and receive only a 20% credit
• This increases the effective tax cost of borrowing, reducing after-tax cashflow
• Lenders have responded by applying higher ICR thresholds (145% vs 125%) for higher-rate taxpayers, reducing how much they can borrow at current rents
• If a higher-rate landlord's rent was previously sufficient for a 125% ICR test, it may now fail at the 145% threshold, forcing a smaller loan or a product transfer rather than a competitive full remortgage
• Section 24 does NOT apply to limited companies, which can still deduct mortgage interest as a business expense — this is the primary driver of the incorporation trend

Limited company remortgage: the key decision points

• Transferring a personally-owned property into a company is a legal sale — triggering CGT on the gain and SDLT on market value
• Limited company BTL mortgages exist from specialist lenders (Paragon, Foundation, Precise, and others) but rates are typically 0.25-0.5% higher
• The company must usually be a Special Purpose Vehicle (SPV) with a property investment SIC code
• Tax savings (Section 24 removal) may or may not offset the CGT, SDLT, and higher rate costs depending on the portfolio and personal tax position
• Professional advice from a landlord tax specialist and specialist BTL mortgage broker is essential before any incorporation decision

BTL remortgage timeline: 6-month action plan

1. 6 months before expiry: Calculate your current equity and LTV. Compare product transfer rates from your existing lender against the whole market via a specialist BTL broker.
2. 5 months before expiry: If proceeding with a full remortgage, submit the application. Lenders will hold rates for 3-6 months.
3. 3 months before expiry: If using a product transfer, contact your existing lender. Most open the transfer window at this point.
4. 6-8 weeks before expiry: If solicitors are involved, ensure they are instructed and progressing. Submit all documentation promptly.
5. At expiry: Confirm the new deal is active and you are paying the correct rate. SVRs trigger automatically if you miss the switch.