What is a Let to Buy Mortgage?
Let to buy mortgages are becoming increasingly popular with homeowners who want to move house but don’t want to sell their existing property. A let to buy mortgage allows you to rent out your current home while using the rental income to cover the mortgage payments. This means you can buy a new home without having to sell your old one. In this article, we’ll explore what let to buy mortgages are, how they work, and the pros and cons of using a let to buy mortgage.
A let to buy mortgage is a type of mortgage that allows you to rent out your current home while you buy a new one. Essentially, it’s a way to turn your existing property into a rental property while you move onto a new home. The rental income you receive can be used to cover the mortgage payments on your old property, while the mortgage on your new property is paid separately.
How does a Let to Buy Mortgage Work?
Let to buy mortgages work by allowing you to take out a new mortgage on your new property while retaining ownership of your old property. You can then rent out your old property to cover the mortgage payments, while you live in your new home. The rental income must be sufficient to cover the mortgage payments on your old property, and you will need to have a deposit for your new property.
Pros and Cons of Let to Buy Mortgages
The pros of let to buy mortgages are that you can move on to a new property without having to sell your old one, which can be particularly useful if the housing market is slow or if you want to keep your existing property for investment purposes. Additionally, you may be able to get a better mortgage rate on your new property, as you will be classed as a homeowner rather than a landlord.
The cons of let to buy mortgages are that you will need to pay two sets of fees, one for your old property and one for your new property. You will also need to have enough rental income to cover the mortgage payments on your old property, which may be challenging if you are in an area where rental demand is low. Finally, you may also have to pay capital gains tax if the value of your old property increases significantly.
In summary, let to buy mortgages can be a useful option for homeowners who want to move onto a new property without having to sell their old one. However, it’s important to weigh up the pros and cons before making a decision. If you are considering a let to buy mortgage, it’s important to seek advice from a mortgage broker or financial advisor.