Let to buy Mortgage

let out your home and buy chain free

A Let to Buy mortgage product allows for the remortgage of your home to a mortgage which allows for the letting of the property. The idea is to allow the owner to repay their current mortgage, release equity if required and let the property out, enabling you to buy your new home chain free.

How does it work in practice?

For example, your current home is worth £750,000, it will let for £3,000 per month and your current mortgage is £300,000. 

You have found the perfect home for £1,500,000 but do not have a buyer for your current home and only £250,000 as a cash deposit. Without a sale of the current home the mortgage required would be approx £1,500,000 purchase price, £123,750 stamp duty, less £250,000 cash, £1,373,750. Over 90% loan to value.

By utilising a Let to Buy mortgage, we could remortgage the current home to release £262,500. This is based on a 75% ‘Loan to Value’ mortgage which would repay the current mortgage and release equity.

The new mortgage required is now £1,111,250 or 74% ‘Loan to Value’ which is far more acceptable to lenders and will attract a more competitive interest rate.


Pros and Cons

  • Need to purchase a new home but have not sold your current property
  • Wish to start or add to a property portfolio as a long term investment or alternative to a pension
  • Offer a chain free purchase
  • Let to Buy stamp duty will trigger the surcharge 3% tax
  • You will have greater total mortgage debt when compared with just selling your current home
  • Additional costs need to be factored in for the maintenance and management of the property

Is this solution right for me?

This very much depends on your own individual circumstances and requirements. It is important to receive the full facts and advice from an expert. A Let to Buy mortgage is a specialist solution as there are many considerations to make.