You are probably familiar with buy-to-let, where you purchase a second property with the intention of renting it. But what if you want to move home as well as become a landlord?
What is ‘let to buy’?
We sometimes find that when we suggest let to buy as an option people find the concept a little odd. We tend to think about our relationship with our property in three ways
- We rent and try to get in a position to own our own home
- We have a mortgage and own our own home
- We have a mortgage and own our own home as well a further new mortgage for a property we rent out.
Traditionally, when we want to move house, we sell the property we own and buy a replacement home. However, why should we sell our old home? With let to buy, you could rent your old home out and potentially become a landlord with a rental income. In effect, let to buy adds a fourth option to the above
- We rent our old home so we can move to a new one and own both houses
With a let-to-buy process, you get the home you want and a second income from your old property.
What happens with a ‘let to buy’?
The process is actually quite straightforward and there is less to go wrong than with a standard house sale and move.
- Your find a home you want and follow the usual process to arrange a buy
- Once you are ready to move, your current mortgage is switched to a buy-to-let one
- Simultaneously you take out a new mortgage on your new home.
It’s as simple as that really. Not only do you get to move, but you are also reducing the chances of delays in the sale chain by being two of the links yourself.
Who should consider ‘let to buy’?
I suppose the obvious place to start is that you need to want to move to a new home. Other reasons include:
- You want to temporarily move to a different area
- You want to downsize but keep your old home as an investment
- You found a property to move into, but you are struggling to sell your current one
- You want to use the equity in your current home to help you onto multiple ownership
- You are part of a couple where both partners own a property
In short, if you want to move and keep your old home as an investment or intend to go back to it at some point, then it is well worth considering.
Things to think about
As with all property decisions, let to buy is a long-term commitment and you need to really consider your options carefully.
- Are you ready to be a landlord? Make sure you understand what that will mean
- You will still need to meet the basic criteria for a mortgage application
- Your rental income may vary but you will still need to meet the cost of both mortgages
- There may well be stamp duty to consider
Let to buy isn’t for everyone, but if it is right for you, it can really solve a problem and help you become the owner of a second property.
Need further help with this? Call us and let’s discuss your options!