What is a let-to-buy mortgage?
Are you looking for a smart investment opportunity that can help you achieve financial freedom?
If so, a buy-to-let investment could be the perfect solution for you. By renting out a property, you can generate a steady stream of income that can help you build wealth and reach your financial goals. Don’t miss out on this opportunity to invest in your future and secure your financial freedom.
A let to buy mortgage is a specific type of mortgage designed when you’re going to rent out your current home and potentially raise equity from that to put towards the purchase of a new home for you to live in.
A let-to-buy mortgage is a specialized mortgage product that allows homeowners to convert their existing property into a rental property while using the equity to finance the purchase of a new home for themselves. This type of mortgage is commonly used by individuals who wish to move to a new home but want to retain their current property as an investment. By renting out their existing home, homeowners can generate rental income to cover mortgage repayments and potentially benefit from future property appreciation. Let-to-buy mortgages provide an opportunity for homeowners to enter the buy-to-let market and expand their property portfolio while securing a new home for their own accommodation.
As the name implies “let” out your current property to ‘buy” the next one. This is different to simply applying for a buy-to-let mortgage as there are different requirements and rules and it can be very complex.
Why would you want to sell your current home when you buy a new one to live in if there was a way to keep hold of it?
Keeping hold of another property is typically very beneficial when you consider the long-term movements of house prices and if done correctly could substantially increase your net worth.
The process of arranging a let to buy mortgage should certainly be an area where you seek the assistance of a mortgage broker as there are many different rules and regulations to be aware of and not all lenders work the same way.
Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.
The main things you need to have or consider when getting your buy to let
✅ Typically a 25% deposit
Lenders will typically require around 25% deposit for a buy to let mortgage so it’s important to make sure you have the deposit available. If you can put down 40% deposit you will typically get the lowest rates available and alternatively if you only have 20% deposit there can be options available to you, albeit they will be a little more expensive due to the lower deposit.
✅ Your income
Lenders will ideally want to see that you have some element of earned income whether that be from your job or self employment. If however you have no income or your income is purely from your rental properties then there are specialist lenders who can consider this type of situation.
If you don’t do things correctly you could even end up with the mortgage provider you’re doing the let to buy through refusing to release the mortgage funds to the mortgage company you’re buying your new home with as there are numerous areas where everything needs to tie up perfectly for both lenders to be happy with the transaction.
It is also worth engaging with a solicitor who can advise you on your stamp duty implications as you will likely be due to pay the additional 3% stamp duty tax.
However, depending on whether you do this in your personal name or ltd company name can make the difference on which property you pay the extra stamp duty on.
Read on to find out what rates are available when in “Remortgaging your buy to let“
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The disadvantages of a buy-to-let mortgage
The disadvantages of a buy-to-let mortgage include the potential for complications in the transaction, such as the mortgage provider refusing to release funds if things are not done correctly. Additionally, you may be subject to paying additional stamp duty tax, and whether it is in your personal name or a limited company name can determine which property is subject to the extra stamp duty.
Using a mortgage broker for your buy to let offers protection
A mortgage broker will be able to offer personalised, unbiased advice, tailored to your specific financial situation, as well as a broad look at all of the products available on the market. They will have a good grasp on what the various lenders are looking for from mortgage applicants and how to package that up with all the documents needed, so that your application stands more chance of being approved quickly, saving you money, time, and stress.
Why choose us
✅ WE’RE EXPERTS IN THE FIELD
Our team of brokers are specialists in advising on Buy To Let mortgages and can help you understand the most suitable options available to you.
✅ WE CAN FIND GREAT DEALS AT SPEED
Access to over 70+ lenders so you will get the most suitable rates and terms available with many of these lenders not available on the high street as they’re exclusive to brokers.
✅ RELATIONSHIP
Real relationships with the lenders so we can get your application pre-approved if your situation isn’t straightforward. Plus your mortgage broker is there to answer all the questions you may have.
✅ RAPID SOLUTIONS
We’re quick, on our first call we will quickly establish your options and let you know the next steps so we can arrange everything promptly for you. If you prefer to speak face to face we can also arrange a video call.
