Want to know how Let-to-Buy can get you moving?

When it launched in the 90s, the buy-to-let concept presented a new wave of opportunities to people who wanted to enjoy the potentially lucrative revenue streams from rental property. It served as a direct contrast to traditional safe home ownership and other investments and banks and building societies were quick to offer a range of mortgage products to support the proposition.

Now there’s another scheme in town – let-to-buy. It’s a twist on the 90s brainchild and, more importantly, it answers a different call for prospective property purchasers – namely how you get to move into your new home when you haven’t sold your own. There are pros and cons and much to consider, so here’s a guide to help you navigate the let-to-buy mortgage maze.

In short

You’ve found your dream home, but yours still hasn’t sold. Let-to-buy helps you use the equity in your existing home to remortage it and release cash for a deposit on the dream home. You then rent out your current home and use the income to pay the mortgage while you get a new mortgage for your new place. You’ll then have two mortgages with the same lender.

The pros

When your property chain is under pressure, let-to-buy can be a quick fix to keep your new home secured.
It’s great for people with two properties who want to move in together, but don’t want/can’t sell one or either of them.
If property prices rise, you could enjoy two nice profits.

The cons

Two mortgages means your commitment is doubled and if property prices fall, you’ll suffer twice.
You’ll pay a stamp duty surcharge of 3% for your second home, but, if you sell your current home within 36 months, you’ll get that payment back from HMRC.
Let-to-buy mortgage rates are usually higher.

Typical lending criteria

A minimum LTV (loan to value) of 75%.
A maximum age of 70 when you apply.
Proof of your prospective purchase.

Next steps

If let-to-buy sounds like an option for you, your first steps should be to talk to a mortgage broker (many let-to-buy lenders will only deal with a broker) and at least three letting agents to get a realistic figure of how much rental you could achieve on your current home.

Then you’ll need to find your dream home. North Stoneham Park is a perfect location if you’re looking for a sound investment with great build quality. Take a look at the Park’s homes pages to find a home that matches your needs – the two-bedroom Radley at Homewood Park is an affordable, spacious and stylish house that’s proving very popular with buyers. The Radley on Plot 163 is our Featured Home and comes with exciting incentives and a sale price of £307,000.

For more information, contact the Park’s recommended financial advisors, Mortgage Advice Bureau, on 01252 710000.