If You Are Planning On Upsizing There Is An Alternative To Selling Your Property – Here Is Your Guide To The Let To Buy Mortgage
Let To Buy – What Is It?
Very simply a let to buy happens when you decide to retain your current property and let it out rather than selling your current property when you move house. Often, the process also involves raising capital to put down towards the new property.
Let To Buy – Pros And Cons
Here are the Pros and the Cons of let to buy mortgages
- You can immediately start or add to your buy to let portfolio
- You will be familiar with the property as you have lived in it previously
- You save time that would be spent searching for a buy to let property to buy
- There will be some stamp duty savings compared to a straightforward buy to let purchase
- You will not be reliant on selling your property so are less likely to be stuck in a chain
- There are some savings to be made on Capital Gains Tax on a property that was previously live in
- You will be more exposed to the value of property and will suffer a bigger loss if prices drop
- You may find it difficult to see strangers living in your former home
- Renting out your home rather than selling it will result in additional stamp duty costs for your purchase.
- If the financing is not done right then your onward purchase may be put at risk
- Recent changes to how rental income is taxed may cost you, especially if you are a higher rate taxpayer
Things That you Will Need in Order To Allow Your Let To Buy Mortgage To Go Smoothly
Enough equity in your property or savings to make up the difference
If you are looking to raise capital for the ongoing purchase then you will need sufficient equity in your current property to be able to raise the capital needed. The maximum amount you can raise is 80% of the value of your current home although 75% will give you a better rate and/or lower upfront fees. If you are short then you will need to make up the difference in savings.
The stomach to pay the stamp duty
New rules governing buy to let purchases mean that stamp duty costs have risen significantly for your onward purchase. You can estimate the cost of the stamp duty here.
A Mortgage Broker who understands let to buy
You will need an independent mortgage adviser who is experienced with let to buy. This area of financing is complex and needs to be dealt with by an expert.
The let to buy process requires an experienced set of office based or online conveyancing solicitors. Preferably, you need to use the same set of conveyancers for both transactions so they can coordinate the two processes.