What is a Let to Buy Mortgage?

We are all familiar with the term buy to let – the process of buying a property with the intention of letting it to someone who wishes to rent. However, the term let to buy is far less well known.

In simple terms, a let to buy mortgage can be taken out by someone who already owns their own home. The idea is that the homeowner rents out their property to tenants, with the rental fees covering the cost of the mortgage each month. The let to buy product will then cover the cost of the homeowner buying another property to live in. This contrasts with a person who buys a property with the intention of simply letting it out to tenants.

Why might you consider let to buy?
This process is typically considered by those who want to move into a new property. While many people sell up and buy another property and tie it all up in one move, the process of selling and buying at the same time is not always easy. Sales can fall through. Problems can occur. You may spot the ideal property and not be able to sell yours, thereby missing out on the property of your dreams.

Let to buy provides an alternative to simply moving from one property to the next. In this scenario, you will plan to rent out your current home, providing you with an income from it. Your let to buy home loan then allows you to purchase another property to move into. The rent from your existing property should cover that mortgage.

How can you tell whether this mortgage would be right for you?
The best way is to discuss your options with a mortgage broker. They will be able to walk you through the process and explain how it works. They will also be able to work out how much you would be able to borrow to buy a new home.

Do you need to factor in your current mortgage payments?
No. If the rent your tenants are paying covers the monthly cost of your mortgage in its entirety, the payments are not included in calculations when working out how much you could afford to borrow. One effectively cancels out the other – at least, that is the idea.

What are the advantages of a let to buy loan?
Some people view this as the ideal way to retain a rental property while still being able to buy a property of their own to live in. Others look on it as a way to create an ongoing investment, with the mortgage costs covered by the rental fees and the property itself ideally growing in value over the years.

It can also be worth considering for those who want to move but who cannot get the best price for their home at present. If house prices are low, it could be the ideal time to buy, with the let to buy loan giving them the chance to hang onto their existing property until prices go up. This makes it easier to achieve a good sale at the right time.

Do you want to find out more about this type of mortgage?
If so, contact one of our experienced and dedicated consultants today. We can provide the expert advice you require. Complete our online mortgage enquiry form and we will be in touch to discuss your requirements.