A Let to Buy mortgage can help you buy your next house when you haven’t got a buyer for your existing home or you wish to move home and retain your current home as an investment (buy to Let).
What is Let to Buy?
If you have enough equity in your home, you remortgage and release some cash to put down a deposit on a new home. When you then move into your new home, you then let out your previous home and use the rental income to cover the mortgage repayments, your previous home then effectively becomes a self-funding buy to let investment (rental income pays the mortgage). As your income doesn’t need to support the previously owned property, as the rental income takes care of this therefore your income can now be used to support the new onward purchased property mortgage.
Let to Buy is also a popular option with couples wanting to move in together, but each have their own property. In this case, you could both move into one of the properties and rent the other one out using a Let to Buy mortgage.
How is Let to Buy different to Buy to Let?
Unlike buy to let mortgages which are taken out by people specifically looking for a property to let out (or to re-mortgage one they currently let out), Let to Buy mortgages are used when you live in a property and want to move elsewhere.
What is the lending criteria for Let to Buy mortgages?
Lending criteria will differ depending on which lender you’re with but most lenders will:
- Offer a maximum LTV of 75% (so you’ll need to have a decent amount of equity in the house)
- Rental income- survey conducted by the mortgage lender to establish forecasted rental income
- Want to see evidence of an onward purchase
- Tax implications- we recommend you seek independent tax advice. Stamp duty land tax has a 3% surplus charge for any residential investment purchase. Stamp duty calculator