The quandary of parting with a property which has held a place in your heart is a problematic one. It may be that the time has come to downsize (or upsize), either way, saying goodbye to a house full of memories is uncomfortable for many. Other people have a more financial attachment to a property, making them unwilling to sell. If you find yourself in a similar predicament, try a let to buy mortgage deal.
As ‘generation rent’ struggle to escape their landlords, and fail to get their footing firmly placed onto the property ladder, the letting market continues to boom. The ‘Buy to Let’ market has really evolved over the last few years, and the lesser known ‘Let to Buy’ is steadily catching it up. We have more about the differences between the two and how they work but for now let’s focus on the benefits of a let to buy mortgage. Let to buy mortgages allow homeowners to rent out their current home through raising a new mortgage and using the extra cash to purchase a new property to live in. Another reason people opt for a let to buy mortgage is because they are wanting to move but cannot sell their current property, or would prefer to keep it. Suitably, this helps those who perhaps need to relocate for work commitments but know one day they will want to return to their original home. Financially, there are some significant gains to be made, as long as you don’t trip up along the way.
It’s not exactly breaking news to learn that the current climate in the rental market is red hot. With high demand for rental properties and tenants willing to part with the increasing rental demand, now is a good a time as any to capitalise.
By choosing the let to buy route, it will mean that you have a property portfolio of at least two properties. It’s good news if the property market continues to rise because you’ll benefit from the price growth of your properties. Having said that, it may be detrimental if the market swings the other way.
There’s more good news about let to buy mortgages, as the interest payments on the loan for the home you are renting out can be offset against rent to reduce your income tax bill. Let to buy mortgages offer tax breaks too. Traditionally, with ‘Buy to Let’ you have to pay Capital Gains Tax (CGT), if you’re making waves of extra cash when you come to sell your property. However, if you the property you are renting has ever been your home (which through the let to buy route, it will have been) you can get huge reductions on your CGT bill, if you ever chose to sell which is better known as Private Residence Relief.
It’s always advisable to speak to a mortgage broker like MortgageKey to iron out the finer details of the let to buy mortgage process. Although there are many benefits to this mortgage product, not everyone will qualify or find it as successful. This process till requires financial checks, securing tenants and organising the right deal financially.
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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.