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For many buyers looking for a new home, the frustrating and slow part of the process can be selling their existing home. With a let to buy mortgage, you can buy your new home as well as keep your existing home to rent out to tenants. With rental property in high demand in many parts of the UK, the buy to let market has been growing significantly in recent years.
With let to buy mortgages, you are basically remortgaging your existing home to a buy to let mortgage and withdrawing the equity to use as a deposit on a new residential property that you intend to move to.
There are several reasons why you might take out a let to buy mortgage as follows:
You might want to move home but believe your existing property is still a sound investment in the long term so would rather keep it than sell it.
If you have found a new home you want to buy but can't wait to sell your existing property, let to buy is an option to speed up the process.
If you are struggling to raise enough money for a deposit for your new property, you can take a let to buy mortgage to free up equity held in your current property and use it as a deposit on your new property.
Let to buy can be a good solution for couples who want to move in together and already own a property each. It allows them to move into one property and rent out the other two.
Both let to buy and buy to let are options if you are looking to rent out a property. A let to buy mortgage is applicable if you want to rent out a property you already own and live it. A buy to let mortgage is applicable if you want to specifically buy a property to let out. The reality is that they are extremely similar but lenders will often review the situations differently, have different lending criteria and possibly different deals.
If you want further information about buy to let mortgages then you can read our comprehensive guide to buy to let.
Important things to consider with let to buy
There are many responsibilities attached to being a landlord. Do your research and ensure you have carefully considered what will be involved.
Ensure you can afford the additional debt. Most importantly, you will need to be able to afford your monthly mortgage payments should your rental property be empty for several months of the year or if interest rates increase.
You cannot live in a property with a buy to let mortgage and vice versa, you cannot rent out a property that has a residential mortgage on it without the lender's consent
Lending criteria for let to buy mortgages can be strict.
You can use our let to buy calculator to work out whether the numbers could add up in your favour. As mentioned, let to buy mortgage criteria can be tricky so you will need to talk to one of our advisers in order to fully understand your options.
The let to buy mortgage process is very complex but can be a rewarding solution if you are looking to hold onto your property assets. Remember that being a landlord and juggling multiple properties can be time consuming and stressful. There are also many tax implications to consider when you have a rental property. Contact us to discuss your situation and we will be happy to help.