Let to buy mortgages have increased in popularity in recent years, as the troubled UK housing market has meant difficulties for many people trying to sell their homes. With a let to buy mortgage, you retain ownership of your current property and let it out, which then allows you to take out a residential mortgage to purchase a new home to live in.
Let to Buy Mortgage Lenders
In a sense, your existing mortgage is remortgaged to a buy to let deal, and you take out a second mortgage for your new property. If you have a large amount of equity in your current home, it may also be possible to release some of this to fund the deposit on your new property (else, see equity release).
This type of mortgage presents a solution to those who want or need to move home (for example due to an expanding family or job relocation) but who either can’t sell their existing home, or simply choose not to.
Most let to buy mortgage lenders look for the property’s monthly rental income to cover a certain percentage above the mortgage payment — typically in the region of 125% but this can vary between lenders. For example, if your mortgage payment is £400, then the lender might expect a minimum rental income of £500 per month.
We recommend obtaining let to buy mortgage advice from a qualified mortgage broker, as despite their increasing popularity, let to buy mortgages remain a fairly specialised type of mortgage and the best deals are often to be found from specialist lenders rather than on the high street.