Let to Buy Mortgages
You may not have heard of "let to buy" or may even have assumed that we meant to say "buy to let". That's because the let to buy mortgage scenario is an even newer concept than buy to let mortgages. This type of mortgage allows you to buy a new home but retain and rent out your existing one. As it's such a new idea, there are still only a few lenders offering let to buy schemes but we'll try to find the right one for you.
Eligibility is dependent upon the proposed rental income on your current property being sufficient to cover the cost of your existing mortgage. Lenders offering this type of loan will usually exclude the existing mortgage from their calculations and offer you a mortgage for a new property based on normal income multiples. This means you can have two mortgages at normal residential rates (providing your current lender will grant you ‘permission to let’), thereby avoiding buy to let mortgage deals which often involve higher rates.
Another advantage of the let to buy route is that the lenders generally require a minimum deposit of 10%, whereas buying a property specifically to let would normally require at least 25%. This in itself can be a good reason to choose a let to buy mortgage.
If you have a reasonable amount of equity in your existing home (over 30%) you can consider a let to buy mortgage without a cash deposit. This involves re-mortgaging your existing home based on the proposed rental income to simultaneously cover the current mortgage and provide an additional advance of funds. The advance is then used as a deposit on the new home that you are purchasing.
For further advice or information please call Emma Wilson on 01603 218043 or use our Mortgage Enquiry form.