What is a Let to Buy Mortgage in Sheffield?

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What is the difference between let to buy mortgage and buy to let mortgage?

Stamp Duty Charges

How to get a let to buy mortgage in Sheffield?

Can I get a let to buy mortgage in Sheffield with bad credit?

The Positives and Negatives of a Let to Buy Mortgage in Sheffield

So, is a let to buy mortgage in Sheffield right for me?

Let to Buy Mortgage Advice in Sheffield

The Financial Conduct Authority does not regulate some types of buy to let or commercial mortgages.

A let to buy mortgage works in the opposite fashion to a buy to let mortgage. Instead of buying a home to rent out, you will be buying a home to move into so that you can let out your current property.

The let to buy process begins with a remortgage on your current property. You will need to swap your residential mortgage product with a let to buy mortgage product.

The next step is to find a mortgage for the property that you are buying and moving into. If you have not saved a large deposit for your new home, you may need to release equity through your remortgage to gain extra funds.

Remortgaging doesn’t necessarily mean that you will be using the same lender, you could perhaps access better rates elsewhere and save money on your payments.

What is the difference between let to buy mortgage and buy to let mortgage?

Technically speaking, a let to buy is a type of buy to let mortgage. A buy to let mortgage applies to properties that are purchased with the sole intention of being rented out to tenants, allowing the property owner to generate additional income through rental payments.

The difference between buy to let and let to buy is that instead of purchasing a property to rent out, you are purchasing a property to move into so that you can rent out your current property. This process involves taking out a residential mortgage on your new home and switching the residential mortgage on the home you’re moving out of onto a let to buy mortgage.

Ultimately, both processes share significant similarities, with minor differences between the two.

Stamp Duty Charges

There are many different costs that come with purchasing a property, and the same applies to let to buy properties. One cost that you may have to account for is stamp duty. You will not face a stamp duty charge on every property purchase, so you should check whether or not this applies to your purchase.

Stamp duty is a tax that can be charged upon the purchase of a property. Whether you are charged with stamp duty can depend on the value of the property. If you are within the stamp duty threshold, you will be charged a percentage of the property price, with the amount going up, the more expensive the property value is.

As your let to buy mortgage advisor in Sheffield, we will work out these costs for you so that you can get an idea of how much it will cost to take out your mortgage.

Please note that the information contained in this article is for general guidance purposes only and should not be considered as legal, financial, or tax advice.

The laws and regulations related to Stamp Duty are subject to change, and the information in this article may not reflect the latest updates or changes in the law.

The amount payable for Stamp Duty will entirely depend on personal circumstances. Please speak with the solicitor acting on your behalf, who will be more appropriate to advise on this.

How to get a let to buy mortgage in Sheffield?

Just like buy to let, in order to get a let to buy mortgage, you must match the appropriate lending criteria. If you are unsure on whether you match the criteria for a let to buy mortgage in Sheffield, get in touch with our mortgage advisors in Sheffield for a free affordability assessment.

First of all, you must have at least a 10% deposit for your residential mortgage, as well as a 25% for your let to buy mortgage. Fortunately, you will have likely built up equity within your current property, meaning that you could remortgage to release a sum of this equity to put towards your deposits.

The mortgage lender will also need to know your projected rental income for the let to buy property. This is because you need to be able to cover 125% of your let to buy mortgage repayments.

Your credit score will have a huge impact on your let to buy application. Mortgage lenders need to be sure that you are a trustworthy applicant that will be able to meet two sets of mortgage repayments.

Can I get a let to buy mortgage in Sheffield with bad credit?

Buy to let and let to buy mortgage criteria can be very strict. In a regular scenario when an applicant has bad credit, it still may be possible to get a mortgage by taking out a specialist product that requires a higher deposit. In this scenario, you are taking out two mortgages, therefore, it would be unlikely that they would risk lending to an applicant with bad credit.

If you have bad credit, a CCJ/default in your name or missed payments, your chances of getting a mortgage are possibly hindered. You should always seek help from a specialist mortgage advisor in Sheffield before going to your bank; if you are declined, you could do further harm to your credit.

The Positives and Negatives of a Let to Buy Mortgage in Sheffield

There is a balanced argument for investing in let to buy. Let’s take a look at the positives and negatives:

Positives

• Letting out your current property eliminates the stress of selling your current home, which can make the moving home process much less stressful.
  
• Owning a let to buy mortgage is an extra source of income. Most landlords put a small portion of the profit back into the property to fund improvements or fix damages and faults (if any), however, this money can be used in any way you like.
  
• In some cases, let to buy mortgages can come with competitive mortgage rates. Although they will not be as low as your residential mortgage, they will likely be better than buy to let rates.

Negatives

• You are responsible for two sets of mortgage repayments each month. If your tenant leaves your property, you will need to have the funds to cover the let to buy mortgage payments. This is something that your mortgage lender will consider when assessing your income.
  
• Property values always change. Your let to buy investment could grow in value, and it can also reduce in value.

So, is a let to buy mortgage in Sheffield right for me?

At the end of the day, it all depends on your personal and financial situation, and what you are looking to achieve. We would recommend speaking with a let to buy expert in Sheffield to evaluate your options and work out your suitability for a let to buy mortgage in Sheffield.

If let to buy in Sheffield is not right for you, perhaps it is time to explore your other options. Get in touch today and we can take a look at your options as a landlord in Sheffield.

You can book a free mortgage appointment online and pick a date and time that best suits you.

Date Last Edited: September 15, 2023