Let to Buy
Let to Buy involves renting out a home you already own while buying another to live in. It normally means considering two mortgage arrangements together: borrowing on the property to be let and a residential mortgage for your next home.
The expected rent, your income, available equity and the costs of owning both properties all matter. We’ll look at suitable arrangements from the lenders available to us, without assuming that letting the old home will automatically fund the move.
Your existing mortgage may need to change before the property can be rented out. A lender will assess the proposed letting and expected rent. Do not assume a residential mortgage permits tenants simply because you are continuing to make payments.
The new residential mortgage needs its own affordability assessment. Your deposit, income and commitments must support that borrowing, including any obligations that remain on the old property. Approval of one loan does not guarantee approval of the other.
Consider two sets of property costs and a period without rent. Additional property taxes may apply, depending on the location and circumstances. Take suitable tax and legal advice rather than assuming that rental income or available equity makes the plan affordable.
Equity is the property value left after the mortgage outstanding, but you cannot assume that all of it can be released for the next deposit. Any new borrowing depends on the lender’s valuation, rental assessment and criteria, as well as fees and any charges for leaving the current deal. Raising money also increases the secured debt.
The two transactions need to work together. Explain your planned purchase date, proposed tenancy and the funds needed at completion so the adviser and legal team can understand the dependencies. Becoming a landlord brings responsibilities and ongoing costs beyond the mortgage. Consider whether keeping the property suits your longer-term plans as well as making the immediate move possible.
Your home or rental property may be repossessed if you do not keep up repayments on the mortgage secured against it. Most buy-to-let mortgages are not FCA-regulated.
We’ll start with your circumstances and what you need from a mortgage, so we can explore the options available to you.
We’ll compare suitable deals from the lenders available to us and explain the repayments, fees and other costs.
If you decide to go ahead, we’ll guide you through your mortgage application and the information your lender needs.
Your lender may offer consent to let in some circumstances, but it is not the same as a permanent buy-to-let arrangement and may have conditions. Whether it fits a planned move depends on the lender and the wider borrowing. Obtain permission before letting the property.
Not necessarily. The relevant lenders’ criteria and the connection between the transactions need to be considered. The important point is that both arrangements work with the deposit, timings and commitments, rather than assuming that one lender or one approval will cover everything.
The mortgage and other costs still need to be met. Allow for periods between tenants, repairs and unexpected expenses when assessing the plan. Expected rent is not guaranteed income, and the lender’s rental assessment is not a replacement for your own contingency budget.
Your property may be repossessed if you do not keep up repayments on borrowing secured against it.
