202014Aug

The Let to Buy Alternative

Let to Buy is proving a popular option for relocating homeowners who do not wish to sell, or are having difficulty in selling, their current home. The concept enables people to become residential landlords by switching their existing main home into an investment property.

Most of us are familiar with Buy to Let mortgages which have enabled so many people to become residential landlords over recent years. After a long period of low interest rates and rising rents, investment property ownership has often offered a good rate of return and even a means of boosting retirement incomes for those at the end of their working lives.

Less familiar will be the principles behind the reverse phrase of “Let to Buy.” Under this concept, those people wishing to move home can become landlords by keeping rather than selling their current main residence. By retaining this home, the substantial costs associated with a sale will be saved. Furthermore, if in a good area, householders can continue to get the benefit of any price growth on the property.

In order to Let to Buy, it is commonplace to take out a Buy to Let mortgage on the existing home as a  remortgage (if necessary), and to raise the deposit for the next home. A standard residential mortgage can then be secured on the new property with the capital and interest payments funded from  income including any surplus rental income from the former main home.

A Buy to Let mortgage is unregulated and may be a bit more expensive than a residential mortgage; also the deposit requirements will be higher. The mortgage payments must be more than covered by the projected rental income.

The Let to Buy approach has proved to be helpful to those seeking to move but who are having difficulty in selling their current home.

If you would like to learn more about Let to Buy and Buy to Let mortgages, it is best to talk to a whole of market adviser like Bower Mortgages who are very experienced and knowledgeable about the options which are available.