Not everyone who buys a new build property is a First Time Buyer.
Here at The Mortgage Mum, we can also support clients who are either selling a property to buy a new home or keeping their existing property to let out, but buying a new one to live in. This is known as Let to Buy.
You are classed as a home mover if you have a mortgage on your current home and plan to move to a new property. You don’t necessarily need to change your mortgage in order to move home, but you have the option to do so.
If you choose to remain on your current mortgage when you move to a new home, you may be able to port your mortgage. Most lenders are able to transfer your mortgage to the new property for you, which is called porting.
When your mortgage is ported, a new mortgage application is required. Even though you already have the mortgage, your application to port it can be refused if your financial circumstances have declined since your original application.
You will need to pay valuation fees and stamp duty on your new property at the time of application. If your new property requires that you increase your loan amount, you may have to take out an additional mortgage, as well as the ported one. This can be quite expensive and you may find that it’s better to look into a remortgage.
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Let To Buy
There are some circumstances when a Let to Buy mortgage is a useful approach to consider when buying a new home. If you already own a property and are looking to move, could this be a sensible option for you?
A Let to Buy mortgage will allow you to buy a new home and let your current property out to tenants. At the end of the process you will own two properties – and have two mortgages.
One mortgage is a standard residential mortgage, taken out on the new home, and you will also need a Buy to Let mortgage product on the house you will be renting out.
Let to Buy is a good way to release the equity from your existing property and use it as a deposit on the new house. It also means you get to retain your first property as an investment instead of selling it.
To use your equity as a deposit you usually need to take both mortgages with the same lender.
You will need to meet the lending criteria of both the residential mortgage and the Buy to Let product.
For the residential mortgage, you will need to meet affordability criteria – with sufficient income to comfortably afford the repayments on your mortgage. Lenders will also check your outgoings and look at your credit record.
For the Buy to Let mortgage you will need a deposit of at least 25%, and the rental income you generate will need to meet a minimum level. This is often 125% of your monthly interest payments.
You will also need to meet certain other criteria depending on the lender. These usually include age limits and restrictions around the type of property.
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