Is Let to Buy our best/only option in this situation?

MJathome

Hi, we’re looking to buy a new build home in Scotland and the builder requires conclusion of missives (exchange of contracts) a few weeks after release for sale and around 6 months before the expected completion.  They aren’t able to confirm exactly when the house will be released for sale, or the price at this stage, but as soon as they do we have to prove we have the funds to proceed with the purchase in order to conclude missives.

We don’t want to sell now and rent as we don’t even know if we’ll be successful in securing the property we want at this stage.

We are fortunate to be retired and own our current home outright.  With savings and the sale of our home, we hope to purchase the new house without a mortgage.  However, without having sold, we don’t have proof of funds to purchase the new one.

First thought was to get a mortgage offer on our existing property. At 70-75% LTV we could fund the new property with the addition of savings.  On concluding missives we would then market our property.  If we sold in time, great, if not we would have to pay the second home charge, but selling within 18 months would enable us to reclaim that.  Unfortunately I didn't consider that our pensions won’t allow us to borrow the required amount (6.5x retirement income!). 

So plan B is to get a similar LTV, buy to let mortgage (to let to buy).  We seem to qualify for this type of mortgage on our pensions with a sensible rental rate. It also provides the option to rent our existing home if prices suddenly fall and we can’t sell.

So the question is, although we like having the option to rent our current home if needed, in the first instance we would like to sell.  Other than higher costs, are there any problems in taking out a buy to let mortgage, but then choosing to sell without ever letting?  Are there any extra hurdles in obtaining a buy to let mortgage that might catch us out when we apply, or rules that we need to be aware of?  

Many thanks.

K_S

@MJathome For Let-to-buy, you will need simultaneous completion on both mortgages - the BTL remortgage and the residential purchase.

Thrugelmir

Normal requirement is for a BTL property to be let to tenants. BTL lending falls under non regulated legislation whereas a residential mortgage falls under regulated. 

MJathome

K_S said:

@MJathome For Let-to-buy, you will need simultaneous completion on both mortgages - the BTL remortgage and the residential purchase.

@K_S  Thanks for the input.  Hopefully we don't need a mortgage on our purchase as it will be funded by the BTL remortgage, but I take your point that we would need simultaneous completion, presumably as we have to vacate our existing home for the BTL remortgage to be valid.