Let to Buy Mortgages

EllenC

Hi all
we're trying to complete the sale of our house to move to another property locally. However, our buyers are being difficult and we're tired of their games so we are going to investigate let to buy mortgages so that we can break the chain and let out our house as an investment. Has anyone done this and can anyone recommend any lenders or brokers?
Many thanks and Happy Easter,
Ellen

HelpWhereIcan

Each lender's policy will be different and I would argue that this is an area in which you would need advice.

In general, most lenders that accept 'let to buy' will want to know that the amount you could rent your existing property out for will be up to 130% of your exisiting mortgage (although some will be happy as long as the mortgage will be covered). This can be a problem if you do not have a lot of equity and a repayment mortgage as it can mean that the rental income is short of the required amount. However, this can be mitigated by switching to interest only if your current lender allows it. Some lenders will want the rental income to be confirmed by a surveyor while others will be happy to have an ARLA letting agent confirm it.

Some lenders will insist that you remortgage your current property onto a buy to let with them as well as taking the mortgage on the new house with them, but this can be more expensive than having the whole of the market to choose from for your new mortgage and your buy to let.

Alternatively, if you still plan to sell the property, there are lenders who will ignore your current mortgage as long as they get confirmation from your solicitor that the property is being actively marketed. IF is one of these lenders and Accord is another. Accord though will also insist that you have at least 25% equity in your current property.

If you plan to keep your exisiting property as an investment for the long term, it may pay to switch that mortgage to a buy to let to benefit from a better rate than your current lender's 'consent to lease' rate.

Choice of lender etc will be influenced by a number of things, including any penalties you may have on your current mortgage and if/when your current mortgage is changed to a formal buy to let mortgage.

Because of the myriad of potential solutions, I would say to get advice and to choose a whole of market adviser preferably through reccomendations from family and friends. Failing that, speak with a couple of firms, making sure to ask the questions that Martins suggests in

http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1101649966,86816,

Hope this helps

edited to change the slant of some points to reflect the fact that OP may be looking at this arrangement as a long term investment.

EllenC

Thanks. There does seem to be a lot of options, so looks like I'll be speaking to a mortgage adviser when their offices reopen tomorrow. Will take a look at the advice to make sure I deal with someone suitable. Thanks again.

Metermaid

Hi, I was interested to read your post as we are looking into something similar as our sale has just fallen through at the last minute. We are looking at Buy to Let to finance our purchase so we can continue with that at least (we are currently renting) - our mortgage advisor has come up with a Northern Rock mortgage as it has no early repayment penalties (we are hoping to only have the mortgage until the house sells and not actually put tenants in).

I hope everything works out for you - it's a stressful time

ToughGuy2005

I did the same last year, when the house builders decided that the house I wanted to buy was going to be their show home. Instead of a Buy to Let I took out a 'Self Certified' mortgage with Birmingham Midshires, this had no tie ins or redemption penalties, which should suit your needs. I was able to declare my rental income from the developers which covered the interest. your situation would require you to have a tenant in place as lenders are less interested in potential income from tenants.

Having completed this transaction I have now moved into the property and have now converted my previous home into a buy to let with existing provider saving lot expenses on remortgaging (solicitor, arrangement fee, valuation). This was achieved by speaking with the customer retentions department who found me a 4.99% rate for 12 months (bargain). The new house is now converting to a traditional mortgage at 5.04%.

I recommend the use of an IFA as they seem able to access special rates not available through the providers normal routes. I found the cards left at developers a good source for an IFA, these guys are recommended by the developers and it is in the developers interest to only use IFAs that know their trade.

It is worrying but if you remember that the problems don't get worse when the banks are shut, only by inaction, then you may sleep better.

Intigued if EllenC is an old colleague, but she will know by my handle who I am.

Faster_Loans

Hi EllenC,
There are a few who specialise but it is a big market. You will not have any difficulty as long as you can show you can afford it.
One way to increase your potential, from a credit point of view, is to have an income from the property.
Regards,
Alex

MortgageMamma

Faster Loans

I suggest you change your signature as it is blatantly touting for business and against site rules. This has been reported to the forum moderators who will not doubt speak with you on this matter.

EllenC

Thanks all, I have spoken to a whole of mortgage specialist and they have recommended a couple of products to me from Clydesdale Bank. It does seem quite straightforward and makes me feel a lot more comfortable about the whole process. So whatever happens with ouur sale, can look forward to my nice new home.

Hi ToughGuy2005 - I don't recognise your handle so don't think we are ex-colleagues.