Let to Buy Mortgage Advice in Hull
The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.
The let to buy process works in exactly the same way as buy to let, just flipped on its head. Instead of buying a new property in Hull to let out, you will be buying a new property to live in so that you can rent out your current one.
To begin your let to buy mortgage journey, you must first remortgage your existing residential property in Hull. This will allow you to switch over your property to a buy to let mortgage.
As well as remortgaging your current home, you will also need to take out a new mortgage on the property that you are looking to live in. Taking out a new mortgage can be costly, even more so when you are looking to invest in buy to let.
When taking out another mortgage on your new property, you will be required to put down a larger deposit. This is because you will now be accountable for two different mortgage payments, therefore, your lender needs to make sure that you are able to afford this. As a mortgage broker in Hull, we commonly see that people choose to remortgage to release equity from their current property to fund the deposit for the other.
Please note that remortgaging a residential property into a let to buy is not the same as a buy to let remortgage.
What is the difference between let to buy mortgage and buy to let mortgage in Hull?
A let to buy mortgage is a variation of buy to let. The mortgage part works in exactly the same way, it’s just the process that is different.
Buy to let mortgages are taken out on a property that is being let out. This property can provide additional income for the holder as a tenant would live inside the property. Usually, the amount that a tenant is charged is greater than the mortgage payments on the property.
The main difference between the buy to let and let to buy process is how they start. We see that most let to buy applicants don’t plan to invest, right until they decide on moving home. This is because, rather than moving and selling your current home, you could keep it and let it out. We call them “accidental landlords”.
This also avoids the stress of moving home. Let to buy landlords can simply keep the property in their name and advertise it to tenants once they have moved and settled into their new homes
Stamp Duty Charges
There are many different costs that come with taking out a mortgage, the same applies for let to buy. One cost that you may come across is Stamp Duty. Some applicants may not face these charges as it depends on the value of the property that you’re buying.
Our job, as your mortgage broker in Hull, is to make you aware of all the costs involved with the mortgage process so that you are prepared and know what you may need to account for. One of our mortgage advisors in Hull will talk you through these costs in your free mortgage appointment.
How to get a let to buy mortgage in Hull?
In order to take out a let to buy mortgage, you must match the appropriate lending criteria. Not everyone will meet the specific requirements, therefore, it is important to make sure that you fit in before getting declined.
Usually, you will need to have a 25%-40% deposit for your let to buy property. This number can change depending on your affordability; that’s why people often release equity from their homes to help them make up this deposit percentage.
To qualify for let to buy mortgage, you will also need to prove that you can cover 125% of your mortgage repayments. You will need a good credit score too. Having a good credit score can be a factor that opens you up to more favourable rates of interest.
Can I get a let to buy mortgage in Hull with bad credit?
Buy to let and let to buy mortgage criteria is much stricter than traditional mortgages. The lender has to be sure that you are able to afford two sets of large monthly repayments.
If you have bad credit, your chances of getting a let to buy mortgage in Hull may be lower than an applicant who has good credit. If you have a CCJ or default in your name, your chances may be even lower of being accepted, though in some cases not impossible!
The Positives and Negatives of a Let to Buy Mortgage in Hull
Positives
Rather than going through the stress of selling your current home and being caught in a property chain, you could keep the property in your name and switch to a buy to let mortgage. This process can be simple and often completed quickly with the help of a let to buy mortgage advisor in Hull.
Having a let to buy mortgage in your name can provide an additional source of income. This profit can be used however you would like.
You still get to move home like you originally wanted, and the moving home process still remains the same for you.
You will need to consider how much both properties are worth. If the value of them go up, you could end up making a hefty profit in the future. This also applies to when you pay off your let to buy mortgage, you will no longer be accountable for the mortgage payments on the property, therefore, you will be making a huge profit on the property.
Negatives
Having two properties in your name means that you will need to account for both of the costs. You are fully accountable for your let to buy property. This includes repairs, damages, etc., as you are a landlord now.
Let to buy mortgages may come with higher interest rates (co-dependant on the economy), which may make your payments higher than your new mortgage. You will need to account for this when buying your new residential property to make sure that you can afford it.
Unfortunately, whilst the value of your properties could go up, they could also come down. This is sometimes to not worry about but to consider.
So, is a let to buy mortgage in Hull right for me?
Is a let to buy mortgage in Hull right for you? Well, that is completely up to you and your personal and financial situation.
It depends on what you are looking to achieve from your let to buy property. There may be other options more viable for you:
- Temporary Accommodation – If a let to buy isn’t quite right for you, but you still want to invest in property and become a landlord, perhaps you could move into rented/temporary accommodation and take out a buy to let mortgage.
Yes, this can be costly, however, you may not match up with the let to buy criteria and this may be your way to meet it. - Consent to Let – You could also consider consent to let. This is where your mortgage lender allows you to rent out your residential property for a length of time, giving you time to move into your new property.
Although this sounds relatively straightforward, this depends on your mortgage lender. You may also find it difficult to find a new home when you have a consent to let going on. - Sell your Home – An alternative could just be to straight up sell your home and move into rented accommodation until you have found a new one to live in. This could be better if you are in a rush to move on from your home. An example of this situation could be during a divorce/separation.
Speaking to a Mortgage Broker in Hull
Our let to buy mortgage experts in Hull are here to help. We have helped many landlords achieve their let to buy aspirations, now it’s time to help you!
We have been working with let to buy for the past 20 years. Our team are experienced and will do everything that they can to help! This includes making sure that you match the let to buy criteria, searching 1000s of deals to find a suitable one for you and delivering open and honest mortgage advice in Hull.
You easily speak with a let to buy mortgage advisor in Hull, simply book online or call us. We are available 7 days a week, so don’t hesitate to call!
Date Last Edited: 11/13/2024
