What Is A Let-To-Buy Mortgage

by | Tuesday 25th Oct 2022 | Mortgage Insights

What is a let to buy mortgage?

What is a let to buy mortgage?

Do you own a residential property, either with or without a mortgage? Are you looking to move to a new home but struggling to sell your property? Or perhaps you just fancy keeping hold of the home for the time being? Maybe a let-to-buy mortgage is for you. A let-to-buy mortgage can often be a solution for lots of property difficulties that people experience when trying to move home. Here is a little breakdown of what let-to-buys are and how they work.

What Is A Let-To-Buy Mortgage?

The normal way that most people transact property is to buy a home, live in it for several years then sell the home and buy a new one. People who are fortunate enough can own their own residential property and then buy a second, third, fourth property to let out as an investment buy-to-let. That is the ideal scenario, however it doesn’t always go as planned.

Sometimes property can take a while to sell. There can be several reasons for this, lack of interest in the area that the property is based at the time, lack of people who can afford to purchase the property, or maybe the property needs some improvements carried out before it is marketable. If you are desperate to move to a bigger home, being unable to sell your property could be a real spanner in the works. But that’s where a let-to-buy mortgage can really come in handy.

How Does A Let-To-Buy Mortgage Work?

If you have enough equity in your home i.e. the share of your property that you own and is not already mortgaged, you can potentially remortgage and release some cash to put down a deposit on a new home. For example, perhaps your house is worth £350,000 and you have a £150,000 mortgage outstanding, you could remortgage your home for £200,000 releasing an extra £50,000 which you could put towards buying your new home.

You would rent out your current home as a let-to-buy property and use the rental income to cover the mortgage on that property. This can be a great scenario if all figures align, and the affordability works for you. If you still plan on selling your original home at some point, this can be a great stop gap so that you aren’t losing money on a home that you are not living in.

On the flipside, if you own a property and want to move to a new home but simply would quite like to keep your old place rather than sell it, a let-to-buy is a good way to do this. This option is often popular with couples moving in together who either own one or two properties already and want to retain their property. As with normal buy-to-let purchases, a let-to-buy can be a nice profitable investment for you if you seek the right advice from a specialist mortgage advisor.

If you think a let-to-buy mortgage might be a good option for you, or anyone you know, please give our advisors a call today to see how we can help.

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