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Do you want to buy a new home without selling your current home first? Then let-to-buy may the answer for you. Here’s everything you need to know.
With let-to-buy, you let out your current home and purchase a new property to live in. It means having two mortgages: you’ll convert the mortgage on your current home into a buy-to-let mortgage. And you’ll take out a standard residential mortgage on the new property you’re buying.
There are lots of factors to think about. You’ll become a landlord, so you’ll need to consider the costs and responsibilities of that. You’ll also need to have a decent chunk of equity in your current home in order to secure a buy-to-let mortgage on your existing home, especially if you need to release equity from it in order to buy your new home.
However, the rewards can be huge. Not only does it mean you can buy a new property without needing to sell your old home first, but you could also potentially see significant financial benefits in the long-term by owning two properties, assuming you can generate enough rental income and that property prices rise.
No, they’re different. With buy-to-let, you buy a property with the intention of letting it out. But, with let-to-buy, you buy a new home to live in and rent your old one out.
If you want to buy a new home and let out your current one, you will need to convert the mortgage on your current home to a buy-to-let mortgage, or obtain ‘consent to let’.
You can speak to your current mortgage lender about converting your mortgage to a buy-to-let mortgage, but please note that your finances will be reassessed under its buy-to-let criteria. It’s a good idea to see what other deals are available with different lenders too. Although, bear in mind if you remortgage with another lender when you’re in the introductory fixed term of your current mortgage you may need to pay a hefty early repayment charge.
It's always a good idea to speak to a mortgage broker at this stage. Not only will they be able to talk through the different mortgage options available to you, but they’ll also be able to highlight any costs associated with these options. You can get in touch with our advisers about a let-to-buy mortgage here.
The lending criteria is different than for a standard residential mortgage. For example, your lender will look at how much rental income the property will make, rather than looking at your income.
The lending criteria will vary by lender, but most will typically:
Depending on your lender and your circumstances, you may find that your current lender will grant you ‘consent to let’. This means you’re allowed to let out the property without needing to convert to a buy-to-let mortgage.
You may find your lender is more likely to agree if you’re planning to rent out the property in the short term while you try to sell it. Or, if you’re moving away for several months before planning to move back. However, if your lender does give consent to let, they may impose a higher rate or a fee.
There’s a lot to consider with let-to-buy so speaking to an expert adviser can really take the pressure off. They’ll be able to explain the process to you and find the right deal for you – plus they may have access to deals you won’t be able to get on the high street.
If you’re considering let-to-buy, speak to our award-winning team to expert advisers for a no obligation chat. Give us a call or arrange a call back or to book an appointment.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances.
The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.