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Let to Buy mortgages can help you buy your next house when you haven’t got a buyer for your existing home. We look at the pros and cons, whether it’s right for you and steps you need to take.
Let to Buy involves renting out your current home and buying a new one to live in. You’ll switch your current mortgage to a Let to Buy mortgage and take out a new residential mortgage on the property you’re buying. This approach allows you to keep your original property as an investment, with the aim of earning rental income and potentially benefiting from any increase in property value.
Let to Buy can be a popular option with couples wanting to move in together, but each have their own property. In this case, you could both move into one of the properties and rent the other one out using a Let to Buy mortgage.
However, there are downsides to consider. Not sure whether to sell up or rent out? Read our guide on when letting a property makes sense.
Let to Buy involves having two mortgages. You’ll need a Let to Buy mortgage for your current property and a standard residential mortgage for the property you want to buy.
With Let to Buy, you can release equity from your current home and put this towards the deposit for the home you’re buying.
However, your options and what’s right for you will depend on your personal circumstances. The award-winning expert advisers at Mortgage Advice Bureau will find the right mortgage for you.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
Unlike Buy to Let mortgages, which are taken out by people specifically looking for a property to let out (or to re-mortgage one they currently let out), Let to Buy mortgages are used when you want to rent out your current home and buy another property to live in.
Lending criteria for let to buy mortgages differs depending on the lender, but most lenders will:
Furthermore, your current property can’t be listed for sale or be sold subject to contract.
Most Buy to Let mortgages require a 25% deposit, although some lenders accept 20% and a small number offer 15% deposit mortgages. In practice, Buy to Let deposits typically range from 20% to 40%+, depending on the lender and property. See our detailed guide which explains how much Buy to Let deposit you need, what affects it, and how to secure the best Buy to Let mortgage rates.
When you apply for a Let to Buy mortgage, the lender will need to know how much you’ll be able to rent out your property for. Lenders typically require this amount to be at least 125% of your monthly mortgage payments.
So you’ll need to find out how much rent you’ll be able to achieve on the property to ensure you can meet this.
After getting an idea of your likely rental income, speak to a letting agent. It’s worth telling the agent you are considering appointing them to manage the property and get them to give you an estimate on what they would set rent as. You should get quotes from at least three agents in order to get a good idea of what rent should be.
Find out more about becoming an accidental landlord and what you need to be aware of with our helpful guide as well as our ultimate guide to renting out your home which outlines the responsibilities to be aware of and the best way to find a tenant. You should also be aware of the Renters’ Rights Act.
If you’re thinking about renting out your home, you may be wondering if switching to a Buy to Let mortgage is possible. Switching to a Buy to Let mortgage means replacing your residential mortgage with a Buy to Let deal so you can legally rent out your property. Alternatively, you may be able to get consent to let from your current lender, which allows you to rent out your home without switching mortgages, usually on a temporary basis. For more on what’s possible, see our guide to switching to a Buy to Let mortgage.
Yes, you have to pay stamp duty when you Let to Buy. As you’ll be buying a second property, you’ll have to pay the stamp duty surcharge (5% on top of the Stamp Duty band). To calculate exactly how much stamp duty you will need to pay, use our free stamp duty calculator.
However, if you sell your previous main home within three years of buying your new home you might be able to apply for a refund of the higher tax rate you paid when you purchased your new home.
Let to Buy can help to ease the pressure when you’re in a property chain. If you need to sell your property with a mortgage so that you can buy your next home it can be extremely stressful. Let to buy removes some of that stress by taking the time pressure off.
However, there are downsides to consider including increased stamp duty costs, and the fact you’ll be responsible for two mortgages.
Ultimately, whether or not Let to Buy is a good idea for you is a personal decision and will depend on your circumstances so it’s important to do your research thoroughly. It’s a good idea to explore your Let to Buy options with a mortgage broker and consider getting independent financial advice too.
Get fee-free mortgage advice from the award-winning expert advisers at Mortgage Advice Bureau.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Please note some branches of Mortgage Advice Bureau may charge a fee for mortgage advice if you go direct. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed. So make sure you use this site, this form or phone number for fee-free advice.
If you need to move quickly and you’re struggling to sell your property, another option may be to seek consent to let for your current property. This typically allows you to let your property for a maximum of 12 months while maintaining your current mortgage. However, lenders do not have to agree to give consent to let and may impose a higher rate or fee.
What’s right for you depends on your circumstances so it’s a good idea to get fee-free mortgage advice.
Buy to Let mortgages are taken out by people who want to buy a property to rent out (or to re-mortgage one they currently let out). However, Let to Buy mortgages are used by people who want to let out their current home and buy another property.
Yes. When you buy a second property you’ll be hit by the stamp duty surcharge, this is 3% on top of the Stamp Duty band. You can calculate how much stamp duty you’ll need to pay with our free stamp duty calculator. However, if you sell your first home within 36 months of completing on your new property, HMRC will refund the surcharge amount you paid.
With Let to Buy mortgages, you’ll have two mortgages. You’ll get a Let to Buy mortgage for your existing property and take out a standard residential mortgage with the same lender for the property you want to buy. If you’re not sure whether to sell up or rent out, read our guide on when letting a property makes sense.
You’ll usually need at least a 25% deposit for your Let to Buy mortgage but you’ll also need to put down a deposit on the buy to let property you’ll planning to buy. To find out how much rental income you may get for your property, try free online rent calculator.
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