Are Let To Buy Mortgages A Better Option Than But To Let Mortgages?

If you get a new job that is quite a distance from your home, or you want to send your children to a school that is not close enough to home and do not want to sell your home, what options are available? Let to buy mortgages are one of them.

One obvious reason for opting for a let to buy mortgage is the need for a bigger property. If you have children and need a larger home, this can be a very useful way of expanding the size of your how and having a property that will provide for the future.

How Do Let To Buy Mortgages Work? Firstly the lender will offer you an amount that is based on your current circumstances without taking into account your existing mortgage. This is based on the assumption that the tenants who you are renting your existing property to will take care of this. The mortgage will be paid by rental income alone.

What Are Let To Buy Mortgages All About? The bank will assume that your existing mortgage repayments will be covered by the rental income earned from the tenants, so they will assess your affordability for the new mortgage without taking the existing one into account.

What Interest Rates Can I Expect From a Let To Buy Mortgage? At the time of writing (March, 2011) the average interest rate on a let to buy was hovering around five percent. However that is not likely to last much longer, with most of the country expecting the Bank of England to begin rate rises as early as May from its current historic low of 0.5 percent.

What Is Required To Obtain A Let To Buy Mortgage? To obtain a let to buy mortgage, both the new property and your existing home would need to be valued. In addition to a capital value, a rental income assessment would have to be obtained on your current home to check that the rent was sufficient to meet the monthly mortgage payments. In addition, proof of earnings such as payslips is generally required.

So one of the key advantages of having a let to buy mortgage is that it can make it easier to move to a new are without giving up the security of your old property. As people's circumstances become more varied in the property market, lenders are likely to offer new products that will accommodate these needs.

Many people have also used a let to buy mortgage as the first step to building up a property portfolio. If you want to invest in property to supplement your income or as an alternative to a pension, a let to buy mortgage can be the perfect way to begin. And, with property prices expected to recover in coming years, now could be a great time to begin your property investment.

When considering a let to buy mortgage, bear in mind that you may need consent from your current mortgage lender to rent out your home. Some lenders will charge a fee for agreeing this, whilst others may increase your interest rate if you are not living in the property.

Another pitfall to watch out for is if your property has leasehold. Double check the leasehold allows you to rent out the property or it could lead to trouble. Speaking to an Independent Financial Advisor or Mortgage Advisor would be the best course in this regard.