Don't Conform With A Buy To Let Mortgage, Have You Considered A Let To Buy Mortgage Instead?

Not to be confused with a buy to let, the let to buy mortgage is another product that reflects people's changing circumstances in the property market. The question is, does it reflect yours? A borrower will rent out their existing property and borrow money to purchase a new home to live in. The purpose of this is generally to allow someone to move, but also keep their existing property as an investment for the future.

Let to buy mortgages allow you to rent out your home to tenants, and then take out an additional mortgage to allow you to buy a new property for residential purposes. If you don't want to sell your existing property, let to buy is a great way around it.

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.

In line with many buy to let mortgages - where you borrow money to buy a property with the sole intention of renting it out - you will typically need a 25 per cent deposit. This has been particularly true since the 'credit crunch' of 2008 where banks have become more cautious about their lending.

What Interest Rates Do Let To Buy Mortgages Offer? Let to buy rates have hovered at around the 5 per cent mark but there is soon likely to be an increase. Monetary Policy Committee of the Bank of England has made it clear that although there has been no rise recently in the base rate of interest, there is likely to be one in the next six months.

Let To Buy Requirements Will Be... The lender would insist on your current home (the soon to be rental) being valued and surveyed, the same would go for the house you wish to purchase. For the rental, the potential monthly rent charges would have to be figured out, but the surveyors will also cover that. They are the only added requirements, the rest are the usual requirements in obtaining a mortgage, payslips, credit checks etc.

A let to buy mortgage can help you move home without being forced to sell your existing property. For example, you may have to relocate with your work, but not want to sell your home in a depressed property market.

What Deals Are Available? Interest rates on let to buy mortgages at the moment are in the region of 4-5%, depending on the lender and how much deposit you put down up front. Bear in mind though that interest rates will increase later this year so now is the time to take action.

If you don't want to lose your home, but need to relocate for whatever reason, let to buy mortgages are a great way to keep your property and 'expand your empire' by having money invested in bricks and mortar.

It is also important to check whether or not the property is leasehold or freehold. If you find out that it is leasehold, then you need to find out what the terms of the lease are regarding letting to tenants.