What is a let to buy mortgage?
Similar to ‘buy to let’, this type of mortgage involves becoming a landlord by renting out your property to others. The difference here is that you already have a residential mortgage, but you want to keep your old property to let to others when you’re moving to a new home. This can be a great option if your property has dropped in value.
Pros & cons of let to buy
To keep your home on a long-term basis for letting purposes, your mortgage will need to be switched to a buy to let mortgage, or you’ll be breaching your contract with your lender. You’ll need approval from your lender to do this, and they may not agree to it. If this is the case, remortgaging may be an option, by finding a deal with a different lender. Be aware of the differences between traditional mortgages and buy to let deals as interest rates are often higher for buy to let mortgages. Remortgaging may also free some equity from your property to put towards a deposit for your new home.
Becoming a landlord
Renting out your home isn’t just as simple as switching your mortgage to buy to let. Ensure you have all the information you need to adequately meet your obligations as a landlord, including any legal responsibilities towards your tenants and property. This should include landlord insurance costs, extra taxes you’ll need to pay, licences required and health and safety measures needed.
When looking to apply for any type of mortgage, getting professional, impartial advice can help you get the best mortgage product for you. Find a trusted mortgage adviser in your local area here.