Let to buy Mortgage
A let to buy mortgage is different to a buy to let mortgage. Rather than buying a new property to let out you let out your current property and use the rental income to repay a mortgage on an additional property that you move into. This means the rental income will need to be greater than the mortgage repayments by around 140% in order to qualify. This figure will vary in accordance to other disposable income that may be used to repay the let to buy mortgage. Due to the added complication of this arrangement you may be required to provide a relatively large deposit for the new property. However if you have a large amount of positive equity in your current property the lender may not require a very large deposit.
Benefits of let to buy
A let to buy mortgage may be of particular use to someone who wishes to keep their property in one location while relocating for employment purposes. If you really like your existing home but need to move far away due to a job change a let to buy mortgage can be the perfect solution. It is also a good way to invest in property without having to save huge amounts of money, because the tenants in your old home pay your let to buy mortgage for you.
Another huge benefit is that you are not tied down by the property buyer’s chain. Since you will not be selling your home you can move at a time to suit you, without having to wait for other buyers in the chain.
Property is seen as an excellent investment for the future – possibly better than a pension. A let to buy mortgage allows you to make that investment while moving house. Once you have repaid the mortgage in full using rental income you will have gained a huge asset, which can be used to provide further rental income or sold for a large cash sum.
Let to buy mortgages are usually available on fixed and discounted rates. Most lenders will have minimum salary and minimum age requirements. The lending criteria is stricter than with other standard mortgages.