Let to Buy
Over recent years, Let to Buy has become a popular consideration for homeowners who either choose not to, or perhaps have struggled to, sell their existing property when they decide to purchase a new home.
It allows those looking to move up the property ladder a chance to retain their existing property as a long term investment. Provided there is sufficient equity, many also choose to release funds to use as a deposit on their new home.
An increase in the number of ‘accidental landlords’ over the last few years has meant that some lenders are reluctant to lend on a let-to-buy basis, and borrowers can therefore find their choice of mortgage slightly more limited.
As with all mortgages, lending criteria is strict, and most lenders will also want to see evidence of the onward purchase to ensure borrowers are not simply attempting to bypass normal affordability checks. Speaking to an experienced mortgage broker is a useful way of finding the most appropriate way forward.
After deciding to do exactly this, our clients approached the mortgage service for the Guild of Professional Estate Agents looking for advice on both the remortgage of their existing property to a Buy to Let mortgage and also on the new purchase.
The property our clients had chosen to buy required some modernisation, but with significant equity in their current home, they had chosen to raise additional funds as part of the remortgage and put down a 40% deposit on the new property, thereby freeing up their own savings for home improvements.
Our clients’ mortgage adviser placed the remortgage application with a subsidiary of a major lender, to secure a competitive 2 year fixed rate. The anticipated rental income was confirmed during the property valuation and was sufficient to cover the mortgage payments and meet the lender’s criteria.
For the new purchase, a separate high street bank was used to secure a standard mortgage, also on a fixed rate, that would allow the clients to review both mortgages in 2 years time. Both mortgages completed on the same day, allowing the clients to settle in to their new home whilst also becoming landlords of their old property.
Guild Mortgage Service, Provided by London & Country Mortgages
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
The FCA does not regulate most buy to let mortgages