Let to Buy Mortgages?

childrenanddogs

Hi there,

I'm a newbie on the forum, so apologies for any mistakes! Been lurking for a long time but finally decided to join and post.

I was wondering if any of you wise people have any knowledge of let to buy mortgages (not buy to let)?

From what I've read about them, it would mean that we could basically ignore the mortgage on our current property and borrow to buy another property, as long as the rental income is 130% of the mortgage payments on the first home to cover it.

To give you an overview of our situation - current house is worth approx £480,000, mortgage of £205,000 on it, would rent for approx £1800-2000 pcm (monthly mortgage payments £1100, repayment).

We've recently been thinking about moving and have found a property that we've fallen in love with. We've made a cheeky offer (£570k, asking price is £650k - down from £750k and £850k previously) and to our surprise it's been accepted. BUT.............only if we can move quickly!

Our current house is in the middle of a kitchen refurb, so we really can't put it on the market until January and we cannot wait that long if we want the dream house.

So we're wondering about getting a let to buy mortgage on our property, and then a new normal one to buy the new house. The additional rental income from the first house would also be very useful but we're not sure if we can release any of the £250k+ equity in it using this or would we have to leave it in the property?

Does anybody else have a let to buy mortgage, or has anybody got any other ideas? Are there still such things as bridging loans?

Any ideas would be gratefully received! And if anybody has a let to buy mortgage and can recommend a lender, I'd be very grateful.

Thank you.

GMS

Have you checked if you are eligible for a mortgage to fund the purchase?

Releasing equity from your current property may be possible dependeing on circumstances.

You really should speak to a 'Whole of Market' broker on this. Can be complicated and needs to be done properly.

luckyfool

If you want a Buy to Let mortgage on your current property to fund the purchase deposit then your property will need to pass a valuation, which might be difficult depending on what state the kitchen is in. i.e. If its ripped out then your property would not be inhabitable as far as the lender is concerned. You could conceivably raise up to 70-80% on your main residence, and subject to satisfactory affordability/income get 70-85% on your new purchase. 90% would be unlikely to be available due to the loan size.

childrenanddogs

GMS wrote: »

Have you checked if you are eligible for a mortgage to fund the purchase?

Releasing equity from your current property may be possible dependeing on circumstances.

You really should speak to a 'Whole of Market' broker on this. Can be complicated and needs to be done properly.

Many thanks for that. We would be eligible for the mortgage, but only if we've either sold our current home, or can do the Let to Buy mortgage on it so that the current mortgage isn't counted against us.

Can I ask what a 'Whole of Market' broker is? We've never used a mortgage broker before as all of our previous property purchases have been very straightforward, but I can see how it would be a good idea here so I'll have a hunt around. If anybody can recommend one, that would be great.

Thanks again.

childrenanddogs

luckyfool wrote: »

If you want a Buy to Let mortgage on your current property to fund the purchase deposit then your property will need to pass a valuation, which might be difficult depending on what state the kitchen is in. i.e. If its ripped out then your property would not be inhabitable as far as the lender is concerned. You could conceivably raise up to 70-80% on your main residence, and subject to satisfactory affordability/income get 70-85% on your new purchase. 90% would be unlikely to be available due to the loan size.

Thanks, but is this only applicable to Buy to Let mortgages (which is not what we're interested in - instead it's a Let to Buy mortgage)?

anselld

childrenanddogs wrote: »

Thanks, but is this only applicable to Buy to Let mortgages (which is not what we're interested in - instead it's a Let to Buy mortgage)?

I think you will find it is very relevant.

Let-to-buy is just a variant of Buy-to-let where you will first have to convince the lender that you existing property is lettable at an income which covers the mortgage, and that the mortgage is a suitable LTV to the property value.

How can you do this if your exisiting property is not marketable until January? If it is not marketable for sale it is not rentable either.

childrenanddogs

anselld wrote: »

I think you will find it is very relevant.

That's fine, I just wasn't sure if the person I was responding to had misunderstood the type of mortgage we were after so didn't know if the advice was still relevant or not.

anselld wrote: »

How can you do this if your exisiting property is not marketable until January? If it is not marketable for sale it is not rentable either.

We wouldn't need to rent it before January, so that's fine.

Jecca238

Hi there,

I'm also in a similar position at the moment and am considering a Let to buy mortgage.
We've spoken with Savills personal Finance (spf.co.uk) (martin mentions them in his mortgage article as a whole of market broker) they had a good knowledge of 'Let to Buy' mortgages and had experience of these so I would recommedn picking up the phone to them, we found them very helpful and informative.

childrenanddogs

Jecca238 wrote: »

Hi there,

I'm also in a similar position at the moment and am considering a Let to buy mortgage.
We've spoken with Savills personal Finance (spf.co.uk) (martin mentions them in his mortgage article as a whole of market broker) they had a good knowledge of 'Let to Buy' mortgages and had experience of these so I would recommedn picking up the phone to them, we found them very helpful and informative.

Thanks Jecca, that's incredibly helpful. I'll give them a call.

herbiesjp

In theory what you are looking to do is possible.

However there are so many variables i.e your incomes, credit history, children, other debts, employment/address history. etc that will all affect your mortgage potential

Maybe I've missed it, but do you have savings for a deposit, or are you looking to raise funds from property1?

Thrugelmir

childrenanddogs wrote: »

From what I've read about them, it would mean that we could basically ignore the mortgage on our current property and borrow to buy another property, as long as the rental income is 130% of the mortgage payments on the first home to cover it.

Not your current mortgage however. It will be based on interest rates of 5, 6 even 7% depending on the lenders criteria.