What is a let-to-buy mortgage?

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. 

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. 

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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