Is a Let To Buy the right way forward for me?

Posted on 27 June 2013 by Becky


Is a Let To Buy the right way forward for me?

I own a flat currently worth £500k. I have a mortgage of £219K on it. I would like to buy a house worth £400K. I was going to sell the flat to release the deposit to buy the house (and get a 50% mortgage for the house). Someone has told me that I should keep the flat, let it, and ask a mortgage company to use the flat as collateral and get a second mortgage for the house. So I still own both properties, let the flat (for a profit) and live in the house. Is this possible? And if so, what should I be asking for? Thank you!!

Becky,

Form the information you've so far supplied, then a 'Let To Buy' is certainly an option for you. Most Buy To Let lenders will allow you to capital raise upto 75% of the value of your current home, subject to the proposed rental income likely to be generated. You can then use the funds raised to provide the  deposit monies for your new home and then take out a new residential mortgage for the balance.

Buy To Let lending is typically capped at 75%, though there are a few lenders who will go slightly higher, again subject the rental income generated. Assuming that the rental income is sufficient, you could raise the mortgage to £375,000 which after settling the original loan will give you £156,000 to put down on the new property. You would then need a new residential mortgage for £244,000 on the new home.

We don't have to go to one lender for both loans, and so we can pick the best Buy To Let, and the best Residential deals for you based on the rest of your personal financial situation.

If you'd like to talk in more detail reagrding your enquiry, then please let me know, and I'll arrange a suitable time for one of our consultants to contact you.

Regards,

Simon

simon.collins@johncharcol.co.uk

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