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.