subject: Don't Conform With a Buy To Let Mortgage, Have You Considered a Let To Buy Mortgage Instead? [print this page] Don't Conform With a Buy To Let Mortgage, Have You Considered a Let To Buy Mortgage Instead?
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's not close enough to home and don't 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.One of the problems with a let to buy mortgage is that you must inform your existing mortgage lender that you intend to let out your current property. Some lenders will have no problem, and others will require certain checks and may ask you to switch to a buy to let mortgage or similar - you will need to check with them to see what their requirements are.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.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.You will also be required to pay a down payment of at least 25% of the property value. If you have more money to put down, you should do so as you'll be reducing your payments over time and you'll also be more likely to get a better interest rate.If you also have budding dreams of creating a little property empire and portfolio of your own, then let to buy can be a very good first option and step on the path to this road. With house prices set to fall this year for the first time in over a decade, the time to begin a portfolio isn't going to get any better than this.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.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.
