Let to buy arises when home owners choose to rent their existing property out instead of selling it when they are looking to move to a new home. They will often obtain a buy to let remortgage on their existing property in order to raise the deposit required on their new purchase.
In a slightly confusing situation some lenders refer to the buy to let remortgage of your existing residential property onto a buy to let mortgage ‘let to buy’. Other lenders will refer to the new purchase as a ‘let to buy’ purchase. As a result it’s best to refer to each part of the transaction clearly – a buy to let remortgage in order to fund a new residential purchase. The combination of these two elements forms a ‘let to buy’ transaction rather than calling any individual one of those two elements a ‘let to buy mortgage’.
In today’s market this is a relatively popular transaction as many people are keen to hold onto their old properties as prices today are not as buoyant as they were in the past. This is combined with the fact that at present rental yields are very good which is attracting new landlords to the market as we are seeing diminishing returns on the stock market for example – many investors haven’t seen a profit in a decade and with inflation running higher than most deposit accounts that’s not much more appealing.
High levels of tenant demand often mean that a let to buy mortgage is less risky than it has been at some points in the past. The average time a landlord will hold a vacant property is at one of the lowest levels since records began. In the past the old property may have been empty for months – now it is likely that it will be filled within a few weeks as long as it is in a suitable area for tenants and is of the size and type desired by your local market. You should definitely consult a lettings agent before you make your decision on this as desirable homes for purchase and rent will differ significantly and in the end sometimes selling your property is the best way forward.