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Let to Buy Mortgages

Let to Buy Mortgages enable you to rent out your current home and buy a new one.

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What is a let to buy mortgage?

A let to buy mortgage is a special type of mortgage transaction that has two elements, these are:  

  1. Keep your current property and remortgage it to a buy to let deal to rent. 
  2. Take out a new mortgage to buy a property to live in.  

With your buy to let mortgage, you’ll have the choice to capital raise if you have enough equity, this often provides the deposit for the new purchase.   

A let to buy mortgage is popular with both couples looking to move in together for the first time, those struggling to sell, and those beginning in property investment. 

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How do I get a let to buy mortgage?

Getting a let to buy mortgage can be tricky, it’s all about getting the timing right between the applications and navigating both buy to let and residential mortgage criteria.

It’s best to seek professional mortgage advice for your let to buy mortgage applications, you’ll stand more of a chance of being accepted and you’ll have the peace of mind that you’re on the best deals for your individual situation.

  • These options are also available:
  • Employed or self-employed clients.
  • Bad credit let to buy mortgages.
  • Got a complicated situation?

A good place to start is to get hold of a mortgage statement from your current lender to see how much you owe and whether you are tied into any fixed rate deals with early redemption charges. Your mortgage broker will then take it from here and will run you through your options.

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What does a let to buy mortgage broker do?

We help both new and existing clients with all their let to buy mortgages needs.  Let to buy mortgages are a specialist area of lending, therefore experience and in-depth knowledge of lending criteria by your broker is vital.   

Our team will handle all your enquiries and let to buy mortgage applications through to completion including:  

  • Find out how much you can borrow. 
  • Can you release any equity? 
  • Find out how much your mortgages will cost per month. 
  • Explain how the process works with both applications. 
  • Recommend the best deals for you based on your personal situation.  
  • Complete applications and progress these with the lenders.  
  • Help you overcome any hurdles we face along the way.  

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Let to Buy Mortgage – Frequently Asked Questions

What are let to buy mortgages?

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Let to buy mortgages are a great way to keep hold of your current property and buy a new home.  Let to buy mortgages are appealing to those who are struggling to sell, couples looking to move in together for the first time, and those that want to start out in property investment.  

Let to buy mortgages are made up of two elements: 

The first element is a buy to let remortgage where your current residential property will be remortgaged on to a buy to let deal, if you have enough equity available you may have the option to capital raise up to a maximum 75% loan to value as an approximate figure. 

The second element is a new residential mortgage for moving home on your new property. You’ll need to have a deposit available which is usually a minimum of 5%.  Often, this deposit comes from savings, a gift from family, or via capital raising on your existing property as above.  

Let to buy mortgages can prove complicated due to the nature of running two simultaneous applications side by side therefore seeking help from a let to buy mortgage broker will prove good value.

How do I get a let to buy mortgage?

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How you get a let to buy mortgage is all about meeting specific criteria in both elements of the mortgage.  Things to consider when getting a let to buy mortgage are: 

Rental income, what is this and how does exceed your mortgage income by enough to meet lending criteria? Also, do you have enough capital available to cover periods of your property not being let or renovated.  

With your residential purchase, you’ll need to have a minimum of 5% deposit available Also, you’ll need to prove your income and affordability along with passing a new credit check. 

Usually, the bigger the deposit you put down on your new purchase, the better the let to buy mortgage interest rate you’ll qualify for.   

Lenders work in bands based on risk; therefore, a 95% mortgage interest rate will usually be higher than a 75% deal where the risk to the lender is reduced.   

If you are over the age of 50, we have a mortgage for over 50’s team of advisors that will be able to help and support you with your home move.  

It’s always best to seek advice when considering a let to buy mortgage application due to the complexities involved, speaking to a mortgage broker, like us, could save you both time and money.  

What is the difference between let to buy mortgage and buy to let mortgage?

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A let to buy mortgage is a variation of a buy to let mortgage, and while their names may sound alike, they serve different purposes. A buy to let mortgage involves purchasing a property with the intention of renting it out to generate additional income. 

On the other hand, a let to buy mortgage often comes into play with “accidental” landlords. These are homeowners who initially had no plans of becoming landlords but later changed their minds and decided to rent out their current home. 

By choosing the let to buy route, they avoid the stress of selling their home and buying a new buy to let property. Instead, they rent out their current property, using the rental income to support their new residential mortgage payments. It can be a practical and financially beneficial choice for those looking to venture into the world of property investment while keeping their current home. 

Are there any stamp duty charges with let to buy?

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Before embarking on a let to buy journey, it’s essential to consider the various costs involved, including the possibility of stamp duty tax and any surcharges that are payable.  

Being proactive and checking this beforehand can save you from any surprises later down the process.  

A good place to start with stamp duty changes is the government calculator – https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#!/intro.  Your conveyancer will discuss stamp duty charges with you and collect this as part of the legal process.   

Our goal is to ensure you have a clear understanding of the expenses, empowering you to make well-informed decisions with confidence. 

Can I get a let to buy mortgage with bad credit?

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Yes, people with bad credit are usually ok getting a let to buy mortgage with a broker’s assistance and guidance.  

For customers with bad credit, it’s not a case of going into a bank or comparing deals online, it’s more complicated than that.  Getting a bad credit mortgage is based on in-depth lending criteria and experience of placing cases.  

Let to buy mortgages often come with unique lending criteria, which can be stricter. Factors like a low credit score, CCJs, defaults, or late payments may impact your eligibility. 

Our vast network of mortgage lenders includes specialists who are well-equipped to cater to various situations, including those with bad credit and ccj mortgages. 

If you’re exploring the possibility of a let to buy, our mortgage brokers are here to guide you. We offer personalised solutions tailored to your specific needs and credit circumstances. 

Rest assured, we’re dedicated to helping you find the right options, even if you’re facing credit challenges. Don’t hesitate to reach out for expert advice and support. 

What are the positives and negatives of a let to buy?

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The positives of a let to buy mortgage are: 

  • Maintain your existing property in case you ever needed to move back into it or for an investment.  
  • Quicker than selling your existing property.  
  • There may be capital raising options on your existing property that you can use towards your deposit for your new purchase.  

The negatives of a let to buy mortgage are: 

  • There is likely additional stamp duty payable.  
  • The commitment of two mortgage payments in the event of your rental property being vacant. 
  • Being a landlord can be hard work as there are rules and regulations to meet. 
  • The responsibility of maintaining two properties for repairs and renovations.  

Above are some of the positives and negatives of let to buy mortgages as a guide, there may be others more personal to your individual situation.   

Are there any alternatives to a let to buy?

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The one main alternative to a let to buy mortgage is to sell your property before you buy a new one, however, we understand that waiting can prove frustrating for some with a specific property in mind.  

Alternative shorter-term lending products such as bridging loans are available to help fund a new purchase without selling your existing property.  Albeit, bridging loans can prove expensive and are not for everyone.  

Our experienced mortgage brokers will be able to discuss any alternative solutions that are available based on your persona situation.  

How can a mortgage broker help with my let to buy mortgage?

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A mortgage broker can provide support and assistance through your let to buy mortgage applications. 

Here are some of the things a mortgage broker can help you with as part of your let to buy mortgage:  

  • Find out accurately how much you can borrow. 
  • Learn how much both mortgages will cost. 
  • Discover whether you have any capital raising options. 
  • How much deposit you’ll need for your new purchase.  
  • Be fully aware of the risks associated with both mortgage deals.  

Also, the application process is complicated for let to buy mortgages, therefore, having a mortgage broker and a dedicated case manager on your side will prove invaluable. A mortgage team will help you overcome any hurdles that you face along the way such as with underwriting, valuations, or surveys.  

Who is eligible for a let to buy mortgage?

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Eligibility criteria for let to buy mortgages can vary among lenders, but generally, homeowners who want to move to a new property and rent out their existing one can apply for a let to buy mortgage.  

Lenders typically assess affordability based on rental income and the homeowner’s ability to manage multiple mortgages. 

Factors such as income, expenditure, size of deposit, rental income projections, equity built up, and conduct of accounts will be taken into consideration for let to buy eligibility.  

It’s always best to speak with a professional when considering a let to buy mortgage transaction. They are complicated to do right, and mistakes made firing applications off online can prove costly and waste time.  

How does the rental income affect the let to buy mortgage application?

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For a let to buy mortgage application, lenders usually consider a percentage of the rental income (typically around 125-145% of the mortgage payment) to ensure the landlord can cover the mortgage, even with potential void periods. 

A good place to start is to contact local letting agents and look online for similar sized properties to yours in your area to see what a realistic rental figure will be.  

Your mortgage broker will then be able to use this rental figure to let you know how much buy to let remortgage you’ll be able to get on your existing property.  

Can I live in the property I'm renting out with a let to buy mortgage?

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No, you are not able to live in your property that has a buy to let mortgage on it. If you find yourself needing to move back into the property, you’ll need to call the mortgage lender beforehand to see what your options are.

If they are unable to help, then it’s best to seek independent mortgage advice from an experienced broker to get the right mortgage product for you based on your personal situation.

Living in your property with a buy to let mortgage will be against the terms and conditions and can result in the lender calling in the full loan.

Do I need a buy-to-let mortgage for the property I'm renting out?

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Yes, if you’re planning on buying a new home to live in and renting out your existing property, you’ll need a buy to let mortgage in place.

Your new residential mortgage lender will also want to ensure that your existing mortgage will be on a buy to let basis also.

What are the differences between a buy-to-let mortgage and a let to buy mortgage?

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A buy-to-let versus a let-to-buy mortgage: 

A buy to let mortgage is one transaction, whether a purchase or remortgage, on an investment property.  

A let to buy mortgage is two simultaneous transactions, the first element is a buy-to-let remortgage on an existing property turning it from residential to buy-to-let, the second element is a new residential purchase for the onward purchase.  

What fees are associated with let to buy mortgages?

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The fees associated with let to buy mortgages are: 

  • Mortgage arrangement and product fees.  
  • Valuations.  
  • Surveys. 
  • Conveyancing. 
  • Stamp duty including any surcharge payable.  
  • Any letting agent costs.  
  • Buildings insurance.  
  • Landlord regulation costs such as gas and electric checks etc.   
  • Tax on the rental income.  

Your mortgage advisor will be able to give you an idea how much the above costs will be based on your personal situation.  The biggest costs are usually with the stamp duty, you can find out using the government calculator how much this will cost.  

How much deposit is needed for a let to buy mortgage?

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A 5% deposit is required for the new purchase with a let to buy mortgage.  This 5% deposit typically comes from savings, gifts from family members, or from capital raising from the existing property. 

Let to buy mortgage interest rates work in bands, therefore, if you have a bigger deposit available that you can put down such as 10% or 20%, the interest rate will likely be lower.  The bigger the deposit you put down the less risk your application is to the lender.  

Can I switch my current residential mortgage to a let to buy arrangement?

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If you are considering a let to buy transaction, it’s worthwhile speaking with a professional mortgage broker to know all your options.  

Simply approaching your current lender will not allow you to shop around for better deals that are available.  Shopping around for let to buy mortgages could save you thousands of pounds in interest over the term of your mortgage.  

What happens if I can't find tenants for my property?

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There’s a risk of void periods where your property is unoccupied and not generating rental income. It’s advisable to have a financial buffer to cover mortgage payments during such periods or explore insurance options for rental income protection. 

Remember, the specifics of let to buy mortgages can vary based on lenders, individual circumstances, and regional regulations, so seeking advice from a mortgage advisor is often recommended. 

8 Reasons to Choose UK Moneyman

Open 7 days a week to work around you.

We're flexible to work around your busy schedule, we work beyond the general 9-5 in order to be there when you need us.

No cost to you consultation.

You won't have to pay us until we do something! We only ask for payment once we get results.

All customers who get in touch will receive their own dedicated case manager.

You'll always have the same case manager to help work alongside you throughout the entire process.

Customer satisfaction is the heart of this company.

Sometimes new landlords need additional support. We’ll be to support you throughout the entire process.

Jargon free insurance advice.

Our team will recommend suitable insurance products to ensure you can stay in your home should you become seriously ill and unable to work.

We search 1000s of let to buy mortgage deals.

Our mortgage advisors will search the market for the most suitable let to buy mortgage to match your current circumstances, saving you time and money.

Our team are experienced and knowledgeable in the industry.

Having been in the industry for over 20 years, we have helped many customers obtain a let to buy mortgage. There's hardly a situation that we haven't come across before.

Your mortgage advisor will be with you every step of the way.

Throughout the mortgage process, we will help you overcome any hurdles you encounter like issues with property surveys and down valuation.

10 Step Guide to Let to Buy Mortgages

1. Understanding Let to Buy Mortgages 

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Let to buy mortgage transactions are specifically designed for individuals looking to purchase a new home to live in alongside keeping hold of their existing property to rent out long term to tenants.

Let to buy mortgages are popular with couples looking to move in together for the first time knowing they have security if things don’t work out and those struggling to sell.

2. How Let to Buy Mortgages Differ from Standard Mortgages 

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A let to buy has two elements to it, the first is a buy to let remortgage turning your current property from a residential into a buy to let, the second is a new standard residential mortgage for your new home.

A standard mortgage has just the one element and makes up 50% of the let to buy transaction.   

3. Eligibility and Criteria of Let to Buy Mortgages 

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Eligibility and criteria for a let to buy mortgage has two parts:

Part 1 is the buy to let mortgage; the eligibility and criteria will depend on how much equity you have in the property, the expected rental income you’ll receive along with your personal affordability.   As an estimate, you’ll be able to remortgage this property up to 75% maximum.

Part 2 is the residential mortgage; the eligibility and criteria will be based on your affordability and creditworthiness along with the size of deposit that you have available.  You’ll need a minimum of 5% however, the more you can put down the cheaper your mortgage payment will be.

The above eligibility and criteria are a general guide, it’s always best to discuss your personal situation with one of our professional mortgage brokers.

4. Interest Rates and Fees

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Interest rates will generally be higher with your buy to let mortgage that with your residential mortgage due to the additional administration involved and the risk to the lender with this type of lending.

As a rule, the more equity you have available for both mortgages, the better interest rate deal you’ll qualify for.

The general fees associated with let to buy mortgages are:

  • Mortgage arrangement and product fees.  
  • Valuations.  
  • Surveys. 
  • Conveyancing. 
  • Stamp duty including any surcharge payable.  
  • Any letting agent costs.  
  • Buildings insurance.  
  • Landlord regulation costs such as gas and electric checks etc.   
  • Tax on the rental income.  

5. Calculating your Affordability for Let to Buy Mortgages

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For let to buy mortgages your personal income and affordability will be considered along with your credit score.

Also, the projected rental income for your buy to let property will be taken in account with your buy to let application.  It’s a good idea to have a look at local letting agents and online to get a realistic projection.

The majority of buy to let mortgage lenders will also insist that you have a minimum salary of between £25,000 to £30,000 also.

If you are self-employed also, there are self-employed mortgage options available to you. 

6. Tax Advice 

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It’s always advisable to work alongside a reputable accountant to ensure you are paying the correct amount of tax with a buy to let property.

There are two main types of tax to consider:

Income Tax – All rental income is taxable. However, there are allowances and deductions available.  It’s always best to check the up-to-date rules with your Accountant.

Capital Gains Tax – Selling a buy to let property might incur capital gains tax, but there are exemptions and reliefs available based on specific criteria.

7. Management and Regulations 

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Being a landlord comes with additional roles and responsibilities.  Not meeting these could result in fines and breaching your mortgage conditions.

If you are planning to work with a local letting agent, they’ll be able to provide help and guidance on what you need to achieve, when, and the frequency.

If you are planning to manage your rental property yourself, it’s important that you are aware of the rules and regulations surrounding being a buy to let landlord.  

8. Benefits of Let to Buy Mortgages 

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The benefits of let to buy mortgages are: 

  • You get to maintain your existing property in case you ever needed to move back into it if things change or for investment purposes.  
  • It’s faster than selling your existing property.  
  • You may have the option to capital raising on your existing property to provide funds for your deposit for your new purchase.  This money may also be used for debt consolidation mortgage if required. 

9. Risks Associated with Let to Buy

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The risks of let to buy mortgages are: 

  • It is likely that there is additional stamp duty payable to HMRC for keeping both properties.  
  • You’ll have the commitment of two mortgage payments in the event of your rental property being vacant. 
  • It is hard work being a landlord as there are rules and regulations to meet. 
  • Expense of maintaining two properties for repairs and renovations.  

10. The Importance of Advice 

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When considering let to buy mortgages, it’s always best to seek great advice along the way to save you both time and money.

Working with an experienced mortgage broker will ensure that you have the best mortgage deal available to you and that the application process goes smoothly.

Your conveyancer will be able to provide you with advice and guidance surrounding the amount of stamp duty that is payable and when.

Also, a reputable accountant will be able to keep you up to date with the latest tax changes and can prepare your accounts.

We search 1000s of let to buy mortgage deals

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Registered Address: 10 Consort Court, Hull, HU9 1PU.

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