Mortgages
Let To Buy
Let to buy is a scenario rather than an actual mortgage product. It's where you remortgage your existing home onto a buy-to-let basis, often releasing additional equity from it at the same time which you can then use as a deposit on a new home.
What is a Let to Buy mortgage?
In this scenario, you take out 2 mortgages: a buy-to-let remortgage on your existing property and a residential mortgage on your new home.
How the Buy-to-Let Remortgage Works
You remortgage your existing property onto a buy-to-let basis so that you'll be able to rent it out to tenants. It’s common to release additional equity from your property by remortgaging for an amount greater than your current outstanding mortgage balance. You can then use this money – along with any savings – as a deposit on your new home.
How the Residential Mortgage Works
The residential mortgage on the new property is pretty straightforward. The lender assesses your income to work out how much you can borrow. The main difference is that they also have to consider how your buy-to-let remortgage will affect your cash flow when calculating what you can afford. Nonetheless, since the buy-to-let remortgage should be covered by the proposed rental income, it will almost certainly be excluded by the lender in the underwriting process for the residential mortgage application.
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