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Let to Buy Mortgages

What is a Let to Buy Mortgage

People are often confused between the terms Buy to Let and Let to Buy. Let to Buy is for those who want to borrow money on their existing home to enable them to buy a new home to live in and let out your existing home to tenants.

When the new mortgage lender calculates how much they are prepared to lend, your existing mortgage is not included in the calculation as long as the rental income covers the mortgage repayment.

For a variety or reasons homeowners may want to let out their existing home and buy a new one to live in. Mortgage lenders see existing mortgages on your credit files and, in order to work out how much you can borrow, this needs to be taken out of the calculation. As you will not have tenants until you leave the property the Let to Buy works on the assumption that your existing mortgage will be covered by the rental income.



Let to Buy Typical Rent Calculation

To ensure your existing mortgage is not included in the calculation the new lender will use their own let to buy calculation. As a guide to the minimum rental required to satisfy this calculation take your monthly interest only mortgage payment and add 25% = minimum monthly rental needed.


Does a Let to Buy Mortgage work for you?

What you need to consider:

  • Let to Buy can be the way to start building a property portfolio

  • Let to Buy works well for those who need to relocate for employment or change of circumstance.

  • Let to Buy can also be appropriate where you are having difficulty selling your property.

  • It is usual for the new lender to ask you to get written confirmation that your existing lender is happy for you to let your existing property.

  • You will need appropriate buildings and contents insurance.

  • It makes sense to speak to a mortgage specialist who can give you all the appropriate facts and guidance to make sure it will work financially for you and that it is affordable.

  • Let to Buy is similar to Buy to Let allowing landlord to grow property portfolios before paying off their mortgage loans

  • Research local rental prices for similar properties

  • Let to Buy if for you if you want to move to a new house but keep your existing property

  • if there is a period of time without tenants you must be able to meet both mortgage payments.




Let to Buy Mortgages Summarized

Let to Buy mortgages are an alternative to the Buy to Let option. It finances your move to a new property whilst allowing you to retain ownership of your existing property and to rent it out. As long as your monthly rental income can cover your interest only mortgage payments the new lender may not take the mortgage in to account when working out how much you can borrow to purchase your new home.

Current Let to Buy Mortgage Deals
Rate Duration Summary Of Rates Cost of Comparison
3yrs Let-to-Buy 3 year Fix 2.24% APR 2.85% 75% Max   2.24% APR
2yrs 2 year fix Let To Buy 1.79%  1.79% APR

for further information regarding any of these products, Please fill in our enquiry form

M Davies Mortgages Ltd is authorised and regulated by the Financial Conduct Authority FCA Number 302051 Consumer Credit Licence Number 546033
FEES - "We do not charge a fee for arranging your mortgage, unless the amount you need to borrow is less than £150,000. In these circumstances the actual amount of the fee will depend on your circumstances but a typical fee is £350"

The APRs quoted above are costs for comparison. The actual rate will depend on your circumstances. Ask for a personalised illustration.