More and more people are considering let-to-buy as a way to get onto the property ladder. But what is it, and is it right for you? Let’s take a look.
What is let-to-buy?
Let-to-buy is when you rent out your existing home and buy a new one to live in. Essentially, it involves having two mortgages at the same time. You convert your existing mortgage to a buy-to-let mortgage so you can let out your current home, and then take out a standard residential mortgage on the home you’re buying.
There are a few reasons why people might choose to do this. Firstly, it can be a way to release equity from your current home so you can put down a larger deposit on your new home. Secondly, it can be a way to avoid having to sell your current home before you’ve found your new one. And finally, it can be a way to generate an income from renting out your current home.
Is let-to-buy right for you?
There are a few things to consider before deciding if let-to-buy is right for you. Firstly, you need to make sure that you’re comfortable with the idea of having two mortgage payments to make each month. Secondly, you need to make sure that you’re happy with the idea of being a landlord. And finally, you need to make sure that you’re able to get the right type of mortgage for your situation.
If you’re thinking of let-to-buying, then it’s important to speak to a mortgage advisor to find out if it’s the right option for you. They’ll be able to help you understand the implications and make sure that you get the best deal possible.
What is the difference between a buy-to-let mortgage and a let-to-buy mortgage?
The main difference is that with a buy-to-let mortgage, you’re buying a property to rent it out. This means that you’ll need to take into account things like void periods and tenant turnover when you’re working out your finances. With a let-to-buy mortgage, you’re not buying a property to rent out, you are turning your current property into a rental property.
How much deposit do you need for a let to buy mortgage?
When it comes to getting a let-to-buy mortgage, you’ll need to have a deposit of usually around 25%. However, the more you can save, the better. This is because the higher your deposit, the lower your monthly payments will be.
You will also need to factor in some other deposits to qualify for a let to buy mortgage:
- Meet the affordability for your new home
- For your new home, aim for a 10% down payment.
- Have a 25% deposit for your buy-to-let mortgage (which can be equity in your current home)
- Make sure your rental income is enough to cover at least 125% of your buy-to-let mortgage payments.
- Even if your credit score isn’t perfect, some lenders may accept you with bad credit.
How IMS Property Group can help you with your let-to-buy mortgage?
We work with a wide range of lenders and offer free advice on the finest mortgage options for your needs. We work in partnership with some of the UK’s most reputable financial organisations to provide expert, unbiased mortgage advice.
IMS is a major independent whole market mortgage firm, with offices in Bicester, Oxford, Thame, Milton Keynes, High Wycombe, and across London. We are a whole of market mortgage brokers, which means we can offer you unbiased mortgage advice and access to a wide range of mortgage deals from across the market.
IMS has a team of specialist Let-to-Buy mortgage advisers who have a wealth of experience in dealing with these types of mortgages. They will be able to guide you through the process and find the best mortgage deal for your circumstances.
We’ll assist you throughout the mortgage process, including no hidden costs or unpleasant surprises, just straightforward, honest mortgage advice.
