2 Smart Strategies to Get Rid of Mortgage or Property Debt

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Introduction

Across the UK, property debt levels are climbing at a steady pace. According to the Bank of England, the total outstanding residential mortgage debt reached £1.65 trillion by the end of 2024, a new record. For landlords and property investors, this often means balancing large portfolios with equally large debt obligations.

In many cases, investors are asset-rich—owning properties that have significantly appreciated in value—but cashflow-poor, with monthly mortgage repayments and maintenance costs eating into profits. The good news is, there are strategies available that can help investors reduce or even eliminate their property debt while retaining long-term wealth.

This article explores two advanced yet proven strategies being actively used by landlords and developers across the UK. Whether you're managing a growing portfolio or looking for ways to ease financial pressure, these smart solutions can pave the way toward financial stability and growth.

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Strategy 1: Refinancing Property Multiple Times to Reduce Mortgage Debt

What is Property Refinancing?

In the UK property market, refinancing typically refers to the process of remortgaging—switching your existing mortgage to a new lender or product, often to secure a better interest rate or access equity. While similar, equity release is more commonly used by older homeowners and allows access to cash tied up in a property without needing to make monthly repayments (often repaid upon sale or death).

In the context of active property investors and landlords, refinancing usually means remortgaging one or more properties to either reduce monthly outgoings or release funds that can be strategically used elsewhere—such as paying down other high-interest debts or reinvesting in higher-yield assets.

How Refinancing Multiple Times Works

Property values in many parts of the UK have seen sustained growth over the past decade. According to the Office for National Statistics (ONS), UK house prices have increased by around 70% since 2013. This long-term appreciation provides investors with growing equity cushions, which can be tapped into through remortgaging.

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Here’s how it works in practice:

1. Capital Growth: If a property purchased for £150,000 in 2015 is now worth £250,000, the owner has £100,000 in capital appreciation (equity), assuming no major changes in the outstanding mortgage.
2. New Valuation: On refinancing, lenders may offer up to 75% loan-to-value (LTV), allowing access to a large portion of that equity.
3. Debt Consolidation: Released funds can be used to pay down expensive credit cards, other mortgages, or refurbish properties to improve rental yield.
4. Repeat: As market conditions evolve, refinancing can be done again after a few years, especially following further appreciation or when interest rates drop.

Case Study: Using Refinancing to Clear 50% of Portfolio Debt

Consider a landlord with a small portfolio of five properties in the North West of England, originally purchased between 2014 and 2018 for an average price of £120,000 each. The initial mortgage debt across the portfolio is £450,000.

As of 2025, due to regional price growth (averaging 6% annually), these properties are now worth £190,000 each. That’s £950,000 total value, with equity of £500,000.

The landlord refinances three of the five properties to 75% LTV based on their new value:

• 3 properties x £190,000 = £570,000
• 75% of £570,000 = £427,500 in new mortgage availability
• Existing mortgage balance on these 3 = approx. £270,000
• Equity released: £157,500

They use this £157,500 to pay off part of the remaining two mortgages, reducing their total mortgage balance from £450,000 to £225,000—a 50% reduction.

At the same time, their monthly mortgage payments drop significantly, improving cashflow by over £1,000/month depending on the new interest rates.

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Pros and Cons of Repeated Refinancing

Pros:

• Improves monthly cashflow through better rates
• Access to capital without needing to sell
• Enables debt consolidation and reinvestment
• Capitalises on property appreciation

Cons:

• Arrangement and legal fees with each remortgage
• Potential early repayment charges
• Risk of over-leverage if property prices decline
• Long-term interest costs may be higher

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When Refinancing Makes Sense

Strategic refinancing is especially effective in the following circumstances:

• Interest rates are falling, allowing lower-cost borrowing (e.g., BoE base rate fluctuations).
• Property values have risen significantly, creating new equity opportunities.
• You plan to consolidate debts or need capital for refurbishments or new acquisitions.

When timed right, refinancing can turn a debt-laden portfolio into a well-oiled, cash-generating machine.

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Strategy 2: Selling Off Select Properties to Eliminate Debt Entirely

Knowing When to Sell

Sometimes, the best way to achieve financial clarity is by reducing the size of your portfolio. Selling one or two properties can allow you to clear the debt on the remaining assets—freeing up cashflow and reducing risk exposure.

Timing the market plays a key role. UK property prices rose by 4.4% in 2023 (Halifax House Price Index), and regional growth hotspots like Manchester, Birmingham, and Liverpool saw even sharper increases. Selling during or shortly after a price upswing can maximise your return.

But it’s not just about price. Capital Gains Tax (CGT) thresholds and allowances matter too. For 2025/26, the CGT annual exemption is £3,000, down from £6,000 the previous year. This means more landlords are facing higher tax bills on sales—so factoring CGT into your exit strategy is essential.

Choosing Which Property to Sell

To maximise debt-reduction impact, landlords should consider selling:

• Underperforming assets with low yields
• High-maintenance or vacant properties
• Properties with high equity (i.e., low mortgages relative to value)

For example, if a property is valued at £200,000 with a remaining mortgage of £40,000, selling this asset may yield up to £160,000 in proceeds before taxes and fees—enough to potentially clear mortgages on two or three other properties.

Reallocating Proceeds from the Sale

The main options after a sale include:

• Clearing mortgage debt on remaining properties entirely, thereby eliminating interest payments and increasing rental profit margins
• Reinvesting in lower-risk or higher-yield options, such as HMOs, commercial conversions, or funds
• Holding cash reserves for future downturns or opportunities

Example: Selling One BTL to Clear All Other Mortgages

Let’s say a landlord owns four buy-to-let properties:

• Property A: Worth £250,000, mortgage £50,000
• Properties B, C, D: Worth £200,000 each, total mortgage £300,000

By selling Property A, the landlord can net approximately £190,000 after fees and taxes. These funds are then used to pay off:

• £100,000 from Property B
• £100,000 from Property C (with a small top-up from reserves)

Now, properties B and C are mortgage-free, and the landlord only carries debt on one property (D). Rental income from B and C can now be reallocated to savings or used to accelerate repayment on Property D.

Return on Investment Comparison:

• Previously, 70% of rental income went toward mortgage servicing.
• Now, 50% of the portfolio is mortgage-free, potentially doubling net monthly income.

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Pros and Cons of Selling to Pay Off Debt

Pros:

• Full or significant debt relief
• Immediate improvement in cashflow and peace of mind
• Simplified portfolio management

Cons:

• Smaller overall portfolio and long-term capital gain potential
• Risk of selling in a flat or declining market
• Possible tax implications, including CGT and loss of rental allowances

Additional Tips

Navigating property finance decisions requires both planning and precision. Here are some helpful pointers:

• Work with a mortgage broker or financial advisor: Their market knowledge can help you access better deals and avoid common refinancing pitfalls.
• Use mortgage repayment calculators: Tools from MoneyHelper or mortgage lenders can project how changes will affect your cashflow.
• Be aware of early repayment charges: Most mortgage products have ERCs within the first 2-5 years. Always factor this into your decision-making process.

Final Thoughts

Whether you're a seasoned investor or managing your first few buy-to-lets, carrying heavy mortgage debt can be a burden—especially when interest rates are unpredictable and margins are tight.

By strategically refinancing or selling select properties, you can unlock equity, boost cashflow, and secure long-term financial resilience. These approaches are not quick fixes, but they are time-tested and increasingly used by savvy landlords across the UK.

If you're feeling the weight of property debt, consider these strategies carefully. Speak to professionals, crunch the numbers, and make informed decisions that support your goals—whether that’s growing your portfolio or gaining more peace of mind.

Ready to take control of your property finances?
Get in touch with our expert team to explore refinancing and exit options tailored to your portfolio. We’ll help you unlock the full potential of your property investments—without the stress.

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