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One of the more
unique options available on the mortgage market. Let to Buy is becoming
increasingly popular with homeowners. However, not all lenders offer
this particular type of scheme so it would be advisable if you contacted
one of our advisors to see if this scheme would suit your circumstances.
To see if this interests you, read on…
What is it?
This scheme
offers you the chance to let out your existing property and purchase
a new one as your main residence. Your existing mortgage payment
would then be covered by a rental payment.
Why let to
buy?
Financially,
in would be beneficial for you. Mortgage lenders will usually offer
you a mortgage for the new property based on the normal income multiples,
even though you already have an existing property. So you would
then have the two mortgages at the normal owner-occupier rates,
thus avoiding the more expensive buy to let mortgages. (See Buy
to Let)
What about
a deposit?
Most lenders
offer around 5-10% as a down deposit under this scheme compared
to the 20% needed for buy to let mortgages.
Does it matter
where I live?
Possibly, yes.
Some areas of the United Kingdom may prove difficult to get a chance
in the landlord market. High property prices and a competitive market
place could hinder your chances of adopting this new venture. However,
if the property you own has been yours for some time, mortgage payments
may be significantly lower than they would be on a similar property
bought now. This may mean that your existing home offers the potential
for a much better rental yield than would a newly bought property.
When is a
good time to do this?
Ideally, if
your children had left home and you were looking for a smaller,
more manageable, property then this would be a good time for this
scheme. Also, if you wanted to move away from your property but
were not willing to sell then this would have its appeal. In such
circumstances let to buy can be a very good option. You get the
benefit of retaining your asset, whilst someone else pays the mortgage
for you, as well as have additional money left over.
Other Important
Points
- Some lenders
will not allow you to let your original property commercially.
- If this happens
then you could always re-mortgage your property (see Re-mortgage)
- Some lenders
may increase your interest rates slightly in line with buy to
let rates.
- You can let
to buy without a deposit as long as you have enough equity in
your home.
- You should
always tell your mortgage lender if you are going to let to buy.
- Also contact
your buildings and contents insurer.
To get the
best free advice, in your particular circumstances, just complete
our simple application form and wait for a call from our advisor
usually within the next few hours.
updated:11/11/02
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