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Mortgage Glossary
Let to Buy Mortgages
Let to buy mortgages are an option besides buy to let mortgages, as the first one offers an amount of money to buy a house to move into, and give the residential home to tenants for rent. It is a new concept, used by a few lenders, but which helps you reduce your expenses, and monthly mortgage payments. The deposit is much lower 5-10 percent then in case of Buy to Let Mortgage, which requires at least 15 percent.

How does it work? The lender works out a plan, of how much money they are willing to loan you, without considering the current mortgage, as long as it is covered by the rent. In most cases they need a deposit, but there are also situations when lenders accept the deposit from remortgage or a secured loan. The first thing you notice is that you are going to have a new lender, who is going to do let to buy calculations, which means that the rent that you receive must fit his estimations in order to disregard your existing mortgage. This is followed by the typical rent calculations.

As everything else in this world, also Let to buy mortgages have advantages and disadvantages. Let’s start with the positive aspects: you can rent out your house, while buying a new one to move into. It is a good opportunity in case you have found a new job, there is change in your life and for a period of time you have to buy a new property while you are gone. You can look at your home as an investment, and you have more freedom as the mortgage is paid by the tenants. It can be at your advantage, in case you have tried to sell your house, but without luck, now you can rent it out, and earn equity. This could raise the value of your home and break the chain of misfortune.
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Once you have paid the mortgage of the property you can look at it as a pension condition. There are different policies from Buy to Let Mortgages; you might have access to a larger value of the property, which means you need a smaller deposit, and with a lot of equity in your existing property, probably no deposit is necessary.

Still there are some disadvantages of Let to Buy Mortgages, such as: in order to obtain the trust of the new lender and apply for a let to buy mortgage, you must ask permission from the old lender bank or company. You must notify the members of the building board (in case of apartments) and contents insurer. In case you have a leasehold property you must make sure that you don’t encounter any restrictions. It is very important to consult with a professional, so you don’t meet up with unknown facts and happenings.

How do you know that Let to Buy Mortgage is the best solution for you? If you have a big house and your children have moved out, this might be the perfect solution to buy a smaller apartment or house, while keeping your residential home. This way the rental payment is enough for the mortgage, and you might as well save some money too. If you have a big career opportunity which requires moving to another town, or district, Let to Buy Mortgage helps you buy a new house while being in the possession of the old one. The idea of a new house is very tempting, and appealing, but you don’t want to sell your home, then try out this mortgage option, which can be the perfect solution for you. Let to Buy Mortgage helps you build the equity of your property.

This alternative mortgage option gives you a sense of safety and security, by preserving you the possibility of returning to your original property when circumstances change.

With any buy to let property you will need an up to date tenancy agreement which is legally binding.
One thing is sure this alternative way of mortgaging is becoming more and more popular between homeowners.
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