Let to Buy Mortgage

Can I get a Let to Buy mortgage as a first-time buyer?

No, you cannot. This is because a Let to Buy mortgage is based on a property you already own and are looking to let out, so a first-time buyer would not qualify.

How does remortgaging a Let to Buy work?

Once the initial Let to Buy transaction is complete and you have moved into your new home, the original property’s mortgage technically becomes a standard Buy to Let mortgage. Therefore, when you look to remortgage it later, you will be remortgaging it as a Buy to Let property. The nature of the property changes from residential to Buy to Let, even though the process of keeping it to fund your new home was called Let to Buy.

What are the alternatives to Let to Buy?

There are a few alternatives to consider:

• Sell your current home: Simply sell your existing property and use the proceeds to buy your new home.
• Consent to Let: Instead of applying for a full Let to Buy mortgage, you can ask your current residential lender for permission to rent out the property.
• Porting your mortgage: If you want to keep the terms of your current mortgage but not the property, you can potentially port the mortgage over to your new residential home.
• Bridging mortgage: You could use a bridging mortgage to cover the financial gap between purchasing your new home and selling your existing one.

How can a mortgage broker help? Is there anything else you would like to add?

A Let to Buy involves taking out two mortgages simultaneously. A mortgage broker can help by ensuring both mortgages are structured correctly, so you get the right amount of equity and the right deal in both transactions. They can also coordinate the process, so both mortgages complete at the same time, preventing unnecessary payments.

Summary

A Let to Buy mortgage is an effective option for current homeowners who want to move into a new residential property without selling their current home. It allows them to retain the existing property as a rental investment, using the equity to fund their new purchase. However, it involves managing two mortgages, meeting strict affordability criteria for both a Buy to Let and a residential mortgage, and considering the stamp duty implications. While not all lenders offer this product, a mortgage broker can provide expert assistance to correctly structure and coordinate the two transactions.

Key Points

• A Let to Buy mortgage enables you to let out your current home to fund the purchase of your new residential home.
• It is different from Buy to Let as it is a linked transaction involving a property you previously lived in.
• You need a minimum of 25% equity in the property you are letting out.
• You must meet the criteria for both a Buy to Let and a residential mortgage.
• The main pros are retaining an asset and potential rental income; the main cons are managing two mortgages and stamp duty.
• You cannot get a Let to Buy mortgage as a first-time buyer.
• Once completed, the Let to Buy mortgage technically becomes a Buy to Let mortgage for remortgaging purposes.
• Alternatives include selling your home, Consent to Let, or using a bridging or porting mortgage.
  
  

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.

For specialist tax advice, please refer to an accountant or tax specialist.