Refinancing is often seen as a sign of savvy property portfolio management. It can unlock capital for growth, improve your interest rate, or restructure your lending to create more flexibility. In many cases, it’s a powerful tool. But in 2025’s unpredictable lending market, refinancing at the wrong time can do more harm than good.

There are circumstances where moving too quickly could increase your costs, limit your options, or weaken your overall portfolio position. Knowing when not to refinance is as important as knowing when you should.

Early Repayment Charges That Outweigh the Benefits

One of the most common mistakes landlords make is ignoring the impact of early repayment charges. These can be substantial, especially if you’re partway through a fixed-rate mortgage term. For some landlords, the fees run into tens of thousands, completely wiping out any interest rate savings. Before considering a refinance, it’s essential to calculate the total cost of redeeming your existing mortgage and compare it against the potential benefit of switching. Our blog, Is It Time to Remortgage? Signs to Watch, outlines how to assess your break-even point and avoid locking in an expensive mistake.

Refinancing Just Before Rates Drop

Mortgage rates in 2025 remain highly sensitive to changes in inflation, the Bank of England’s base rate, and competitive pressure between lenders. If forecasts suggest that rates are likely to fall in the near term, locking into a longer-term product now could mean you end up overpaying for years. Some landlords prefer to take a short-term tracker or delay refinancing altogether until conditions improve. Our guide to UK Buy-to-Let Strategies in 2025 explores how timing plays a crucial role in securing the best possible deal.

Refinancing When Property Values Are Low

Market conditions can affect more than just rates — property valuations also play a critical role. Refinancing when values are temporarily suppressed could result in a higher loan-to-value ratio and limit your product choice. You may also find yourself on less competitive rates simply because the equity position is weaker. For more on how lenders calculate value, see How Lenders Value Buy-to-Let and Investment Property in 2025.

Weak Rental Coverage

Lenders apply rental stress tests to ensure your portfolio generates enough income to cover mortgage repayments even if rates rise. If your coverage has slipped due to higher costs or void periods, you may find your borrowing power reduced, and any refinance could result in less favourable terms. For landlords with HMOs or multi-unit properties, our article How to Finance an HMO in 2025 offers practical steps to improve your rental yield before approaching lenders.

Credit Profile Challenges

Your credit profile directly affects the cost and availability of finance. If your circumstances have changed — perhaps due to new borrowing, missed payments, or a high utilisation of existing credit — you may find that refinancing now results in less attractive products. Taking time to repair your credit profile before applying could make a significant difference.

Over-Leverage and Portfolio Risk

Releasing equity can fund new acquisitions or refurbishments, but increasing your debt load also increases your exposure to risk. In a rising interest rate environment, or if rental income falls, high leverage can quickly erode your safety margin. Our piece on Using Equity Release for Portfolio Growth highlights when this strategy is beneficial — and when it might be best to wait.

Borrowing Costs Exceeding the Return

Refinancing to fund new investments only works if the return on those investments comfortably outpaces the cost of borrowing. If the figures are tight — or rely on overly optimistic assumptions about rent or capital growth — it might be better to delay.

Compliance and Property Standards

Regulatory compliance is another potential stumbling block. Lenders are increasingly focused on EPC ratings, gas and electrical safety certification, and HMO licensing where applicable. If your properties don’t meet these requirements, you may find your application rejected or approved only on restrictive terms.

Tax Considerations and Timing

Refinancing can have tax implications, particularly if it involves transferring properties into a limited company, changing the ownership structure, or releasing equity for non-property purposes. While we do not provide tax advice, landlords should always seek guidance from a qualified adviser before restructuring finance, as the timing can influence tax liabilities.

The 2025 Market Context

This year, lenders are operating with a mix of competitiveness and caution. While there is appetite for good quality business, underwriting criteria have tightened for certain landlord segments, particularly larger portfolios or higher-risk property types. Energy efficiency standards are also influencing lending decisions, with some lenders offering preferential terms for properties with EPC ratings of C or above.

In this climate, moving too early can result in missing out on more competitive terms later, while waiting too long could expose you to rate increases if market sentiment changes.

A Real-World Example of Waiting and Winning

Earlier this year, a landlord with a portfolio valued at £1.2 million considered refinancing to release £200,000 for expansion. The move would have triggered £35,000 in early repayment charges and increased their portfolio’s LTV to 80%. After reviewing the case, we recommended delaying the refinance until the ERC period expired and the rental coverage improved. Six months later, they secured a lower interest rate, avoided the hefty ERC, and maintained more flexibility for future finance — saving more than £25,000 over the first three years of the new term.

How Willow Private Finance Can Help

At Willow Private Finance, we don’t just look at whether you can refinance — we look at whether you should. Our role is to analyse your current borrowing, project different market scenarios, and weigh the benefits of acting now against the advantages of waiting. In some cases, the right advice is to hold fire until market or personal conditions improve.

One recent client came to us intending to refinance three properties in Surrey. After reviewing the terms, we advised delaying for nine months to avoid punitive ERCs. When they returned, market conditions had improved, their LTV was lower, and they were able to secure significantly better terms — saving over £18,000 in interest.

📞 Want Help Navigating Today’s Market?

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