Let to buy mortgages can provide an alternate solution to selling your home, so that you can buy a new one. You may have outgrown your old house, or need to relocate for work purposes, but either you can’t sell your property, or you don’t want to sell it, resulting in a let to buy mortgage as a possible solution. If you own enough equity in your current property, you could remortgage it to free up some cash for the deposit on your new home. You would then let out your current property, using the rental income to cover the cost of your new mortgage. Hence ‘Let to Buy’.
A lot of it comes down to timing. You may have found the ideal new property to buy but the valuation of your current home may not be quite what you are willing to sell it for, so you wouldn’t mind holding onto it for a while. Therefore, renting it out whilst securing your new property with a let to buy mortgage is a great solution. As a matter of fact, in the current housing market, the significant increase in rental demand, and rental prices, has seen the interest in let to buy mortgages flourish. Homeowners have come to realise that they could rent out their existing home for more than the monthly mortgage repayments.
By biding your time, and holding onto your existing property, not only could you make margins on the rental income but you could benefit from an increase in property value over time. Let to buy mortgages also provide you with an opportunity to someday move back into your property without the stresses of a chain.
A let to buy mortgage could be a way of amassing an impressive property portfolio. As we all know, property is very valuable and tends to only rise in value over time. Therefore, investing wisely and managing tenants could pay off in big proportions, when you come to retire.
Finding a lender you can trust to find the right deal for you is crucial. Lender’s will vary their criteria and advise best-fit solutions to your circumstances. Using an independent mortgage broker means you will have access to a greater range of products with an unbiased offering. Plus, thanks to their existing relationships with lenders, they will know exactly where to go and what offers are available. It’s not uncommon to discover that some lenders will allow you to let out your homes on residential mortgages on a lower interest rate. Although, usually, this is on a temporary basis. This is why let to buy mortgages are suited to those with long-term ambitions.
Essentially, with a let to buy mortgage you are basically switching your current residential mortgage to a buy to let deal, which is assessed through the expected rental income, rather than your income. In turn, this frees up your actual income to steer towards another residential mortgage on another property. As long as you have enough equity in your current home, you may want to release some of this towards raising a deposit for your new home. Usually, let to buy mortgages are only available on a maximum of 75% of the property's value. Also, you will need to demonstrate that the expected rental income is at least 125% of the new mortgage payments. This allows lenders to see that there’s a bit of room for maneuver to counter rental voids and maintenance.
Entering the realm of landlords should not be taken lightly. It can be taxing. There are a lot of laws and legislations that go with renting out a property. If you’re not in tune or in touch with it all, you could find yourself on a slippery slope. Failing to make the monthly repayments could end up with the repossession of your property.
Let to buy mortgages at MortgageKey are a readily accessible option for those who find themselves in similar situations as above. We have the experience and expertise on hand to deliver you the best let to buy deals on today’s market. Speak to one of advisors today.
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Representative Example: Annual Interest rate of 2.44% fixed for 2 Years followed by 3.59% for the remaining term. Representative 3.50% APRC Variable. Based on borrowing of 150,000 over 17 years repayments of £899 per month. Total amount repayable £198,466. Includes Lender Fee of £995 and Broker Fee of £695.