Find out about a let to buy mortgage…
What is a let to buy mortgage?
Let to buy mortgage is a type of mortgage that enables homeowners to rent out their existing property and purchase a new one to live in. In other words, the homeowner will let out their current property and use the rental income to cover the mortgage repayments, while taking out a new mortgage to purchase their new home.
This can be an attractive option for homeowners who are looking to move but want to retain their existing property as an investment. It can also be useful for those who are struggling to sell their property in a slow market, as it allows them to generate rental income while waiting for the market to pick up.
How it works
Your financial situation
It’s important to evaluate your financial situation. You will need to consider your income, expenses, and any existing debts, as well as the potential rental income from your existing property.
Research
After assessing your financial situation, you can begin researching let to buy mortgage products and lenders. It’s very important to compare rates, fees, and terms to find the best option to suit your needs.
Application
After selecting a mortgage product and lender, you can begin the application process. You will need to provide information about your financial situation and the properties you wish to purchase and rent out.
Valuation
The lender will arrange a valuation of a property you want to purchase and the property you want to rent out. Valuation will ensure that the properties are suitable for the mortgage and to assess their value.
Obtain mortgage offer
After successful application, you will receive mortgage offers for both properties. It’s important to carefully review the terms and conditions of each offer before making a decision.
Completing the purchase
After accepting the mortgage offer, you can continue with the purchase of your new property and the rental agreement for your existing property. Make sure that the rental income is sufficient to cover the mortgage repayments on the existing property.
Manage the properties
Once the let to buy mortgage is in place, you will need to manage both properties, including arranging tenancies, maintaining the properties, and making mortgage repayments on both properties.
Thinking of a becoming a landlord? Check out: https://www.gov.uk/browse/housing-local-services/landlords
What do you need?
There are several requirements that you will need to apply for let to buy mortgage. Here are some of the requirements you will typically need to meet:
Deposit
Sufficient rental income
Financial stability
Property assessment
Existing mortgage
Credit history
Landlord experience
Please remember that the specific requirements and documents needed may vary depending on the lender and the specific let to buy mortgage product you are applying for. Always consult with me for the guidance on the application process and ensure that you have all the necessary documentation in place.
Have a question or would like more information on let to buy mortgages?
First Time Buyers
Mortgages specifically designed for individuals who are purchasing their first home.
Residential
A residential mortgage is a type of loan used to purchase or refinance a residential property.
Buy To Let
Designed for individuals who want to purchase a property with the intention of renting it out to tenants.
Let To Buy
A mortgage that enables homeowners to rent out their existing property and purchase a new one to live in.
Remortgage
Remortgage is a process when a homeowner switches their existing mortgage to a new lender or product.
Protection
You’re in safe hands. I can support you in safeguarding your financial wellbeing and assets in case of unforeseen events.
Let to buy – Frequently asked questions
What is let to buy?
If you have enough equity in your home, you remortgage and release some cash to put down a deposit on a new home. You remortgage on let to buy the product, where the mortgage available will be assessed on projected rental income. And you move out to your new residential.
What is the lending criteria for let-to-buy?
Minimum equity required to stay in the property 25%. Proof of onward purchase will be required.
What are the cons of let-to-buy?
You are now responsible for two mortgages. If you have tenants that is brilliant, however if you don’t the lender doesn’t care, you are liable for your mortgage payments. You will be hit by stamp duty surcharge which currently is 3%, as you will have additional property.
What are the pros of let-to-buy?
It can help ease the pressure when you’re in a property chain. Don’t forget advantage of that potential value increase.
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