Let to Buy Mortgage
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You may have heard the term "Let to Buy mortgage” but what does this mean, and is it suitable for you?
Let to Buy is not complicated and can be used in the following circumstances.
Have you found your perfect home? Do you want to buy a new property but haven't found a buyer for your current home?
Don't let this stop you from buying your dream property. There are some lenders who are prepared to offer a mortgage for people who want to move to a new property while you let your old home in order to finance the new mortgage. This works as follows. You mortgage your current home to raise funds so that you can clear your current mortgage and raise further funds to enable you to move.
The Let to Buy lender will pay off your old mortgage so that you can transfer your old mortgage to your new property or alternatively take out a new mortgage with a new lender on your new home.
Obviously, there are things to consider with a Let to Buy mortgage. The lender is will want a valuation carried out on your property to make sure there is enough equity in your current property. They will also want to make sure that your property receives enough rent to be able to fund your new Let to Buy mortgage. These calculations are complicated and can differ depending on whether you have a two or five-year fixed rate and also it depends on your current tax status! For example, a 40% tax payer would be loaned less than a basic tax payer.
Basic example of how a Let to Buy mortgage works!
Current Home Value say £200,000 and you owe £80,000. You believe the rental figure of your home should you rent it is say £860 per month. The lender would typically lend you up to £150,000. This would then clear your current mortgage of £80,000 so you could then transfer or take a new mortgage for the ongoing purchase. You would also have taken £70,000 equity from your property to help fund the new home with all its costs.
The market leaders in Let to Buy mortgages are The Mortgage Works (part of the Nationwide Group) and BM Solutions (Part of the Lloyd’s Group). However other lenders such as Barclays, Bank of Ireland, Clydesdale, Kent Reliance, NatWest, Precise, Virgin Money and some challenger banks.
Don't let this stop you from buying your dream property. Please give us a call and we will let you know what is and what is not possible. There are no fees for this service or to get you agreed in principle.