Let to Buy Mortgages ( LTB Mortgages)
Let to Buy Mortgages ( BTL Mortgages ) are NOT regulated by the Financial Services Authority as they are regarded as a commercial investment transaction.
Let to Buy Mortgages
Let To Buy is another mortgage product available to customers which offers an alternative to the popular “Let to Buy” option.
A let to buy mortgage works by allowing you to borrow money to buy a new home to move into, while your existing residence is let out to tenants.
The new mortgage lender will calculate the maximum that they are prepared to lend you and not take your existing mortgage into consideration as a commitment as long as the rent covers the existing mortgage payment.
There could be a number of situations when you need to move house quickly. Perhaps following a job relocation or if you have found your new home but haven’t yet managed to sell old one, or if you don’t want to be part of a property chain. The majority of people however rely on the equity in their home in order to buy the new one.
The easy way around this problem could be to re-mortgage your current home and release the equity to buy the new one. Your old home can then let to tenants to cover the increased mortgage costs. You then always have the option to sell the property further down the line.
More and more mortgage companies are now offering this type of deal at competitive rates. Many people want to move house but don’t always want to sell their current home, however, without access to the equity, few people can afford to buy a new home outright. This can make buying a new home far simpler without having to rely on the sale of your property in today’s market. This can however, be a risky strategy unless your property is already suitable for rental and you can find good tenants quickly. Maintenance and property management costs should always be taken into account.
Let to Buy Rental Calculation
For the new mortgage lender to ignore your existing mortgage the rent you will receive will have to fit the new lenders let to buy calculation. A typical example of this would be your exiting mortgage balance mulled by the lenders variable rate divide this by 12 and multiplied this by 118% to arrive at the minimum rent required. If there is a shortfall on your let to buy rental some lenders will annualise the shortfall and class this as a commitment before they calculate the maximum mortgage they will offer you.