Avoiding negative equity

[Ellski 1]

Hi All,

I had a question in regards to the 18 year property cycle and remortgaging. 

What is the best approach when it comes to fixed terms on the BTL mortgages and avoiding negative equity if you are building a portfolio and refinancing at the end of each fixed term to take advantage of capital growth? 

Would it be wise to offset your fixed terms between properties to try and lower your risk to hitting negative equity if prices drop?

I know Rob B mentions that you should use short term fixed mortgages instead of longer fixed term in order to take advantage of an interest rate drop after a crash while using the additional equity in the house to expand but I’m a bit confused how this works as surely you could be in negative equity / very close to this and a lender wouldn’t cover the higher exposure or does it not matter as your rent wont necessarily drop much?

 

Thanks in advance!

Elliot