How does a Let to Buy Morgage work?
What is a Let to Buy Mortgage?
Simply, where you Remortgage your Residential property onto a Buy to Let Mortgage and then purchase a new residential property. Usually simultaneously.
During this process, you can raise cash from your current property to use as a deposit for the new residential property.
This will be subject to you having enough equity in your property. Because you can usually only go up to 75% Loan to Value on a Let to Buy Morgage.
As you have lived in the property this now falls under consumer buy to let regulations, which means that the mortgage is regulated by the FCA.
This essentially just provides you with greater protection during the advice process.
Most lenders will want a simultaneous completion, with both properties to complete on the same day.
There is however a lender who will allow you to raise funds before you purchase your new residential property allowing you to rent in the interim.
This is where a Specialist Mortgage Broker will be able to advise you on the best way forward.
What is a consent to Let Mortgage?
Where you keep your existing Residential Mortgage on your current home and get consent from your existing Lender to rent the Property out.
Consent to let is an alternative to let to buy.
Some people may want to do this if they don’t need any extra funds on a Remortgage or are maybe tied into a long-term fixed rate and do not want to incur any early repayment charges.
Some customer maybe on a lower rate than available, therefore it wouldn’t make sense or be good advice to recommend redeeming these products.
Some lenders may charge a higher interest rate or a fixed yearly fee to give the consent to let.
Some lenders also giving you a certain timescale in which the mortgage must be changed into a buy to let.
It is worth keeping in mind that not all lenders will allow you to have 2 residential mortgages.
This means there will be less options available and lender affordability calculations could restrict the maximum borrowing for your onward purchase.
Bad Credit Let to Buy Mortgage
Yes, but going about things in the correct way is important.
Let to buy mortgages include criteria from residential and buy to let.
To ensure you are finding the best and cheapest Lender for your circumstances, enlist the help of a Specialist Mortgage Advisor.
Let to Buy Mortgage Application
You will have to meet certain Criteria set by the Mortgage Lenders. And your Application will be assessed based on the following:
- Age of Applicants
- Rental income for the property
- Equity in property – loan to value
- Affordability – Income and Outgoings
- Credit profile
- Onwards purchase
Let to Buy Stamp Duty
When looking at costs involved with any let to buy mortgage, it’s imperative to include the additional stamp duty charges.
The government changed the stamp duty legislations in 2016, if you are a homeowner then you are required to pay an additional 3% on all second properties.
You can claim back any additional stamp duty if you sell the property within 3 years, you must do this directly with the government.
If in any doubt, please check the government website for more information.
Our Mortgage Brokers
We work with a variety of Mortgage Brokers which each specialise in different Mortgage Advice areas. When you get in touch, simply select the reason why you’re getting in touch i.e. First time buyer, Bad Credit, Remortgage etc. And we will match you to the Mortgage Broker which Specialises in your circumstances.
Get in touch for a free non-obligatory conversation with one of our Specialist Mortgage Advisors for further information on how they can help you.
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Whether you’re a first time buyer or simply looking to Remortgage. Get in touch with us today, so we can put you in touch with a Mortgage Advisor which Specialises in your case.
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