Introduction
Let to buy is becoming increasingly popular among homeowners who want to move to a new property without selling their current home. It can offer flexibility and the opportunity to build a property portfolio, but it also comes with additional considerations.
What is Let to Buy?
A let to buy arrangement allows you to convert your existing residential property into a rental property while purchasing a new home to live in. This usually involves taking out a buy-to-let mortgage on the existing property and a residential mortgage on the new home.
Why Do People Choose Let to Buy?
Homeowners may choose let to buy if they expect their current property to increase in value, wish to retain a long-term investment, are struggling to sell their current home, or want additional flexibility during a move.
Deposit Requirements
Lenders will usually require sufficient equity in the current property and an adequate deposit for the onward purchase. Rental income from the existing property must normally meet lender affordability requirements and the residential mortgage for the onward purchase must also be deemed affordable.
Things to Consider
Let to buy can involve additional costs such as stamp duty surcharges, legal fees, landlord responsibilities, maintenance costs, and potential void periods where the property is unoccupied.
Tax Considerations
There can be tax implications associated with rental income, capital gains tax, and stamp duty. Borrowers should seek independent tax advice tailored to their circumstances.
How a Mortgage Broker Can Help
Not all lenders offer let to buy mortgages, and criteria can vary significantly. A mortgage broker, such as Curzon Financial, can help structure the arrangement, explain affordability requirements, and identify suitable lenders.
Conclusion
Let to buy can be a useful strategy for homeowners looking to move while retaining their current property as an investment. Professional advice is essential to ensure the arrangement is suitable and affordable.
Important Information
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. The information contained in this article is for general guidance only and does not constitute financial advice. Mortgage products and interest rates are subject to status, affordability, and lender criteria. Tax treatment depends on individual circumstances and may change in the future.