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Let to Buy

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  • Let to Buy

    I have been to a mortgage broker because I am interested in climbing the property ladder.

    His advice to me is to keep my present home (75% equity) and rent it out.

    Buy the new house (and keep this one) using an interest only mortgage on one house (possibly both) and using the rent to over-pay on my new (main) residence. My equity is spread between both houses from the outset.

    My old house - though not paid for - is sold at some time in the future (having increased in value) to pay off the remaining on my new house. With any luck (he says) I might even have paid off both houses over the next twenty years.

    The advantages (he says) are high rental values and daily interest calculations on interest only mortgages.

    I have no proper repayment vehicle but he says that this can be got around.

    My earnings and prospects are good though I have twins coming up for university in the next five years (I am 47.)

    It all sounds a bit dodgy to me. Too good to be true.

    I'd like some informed opinion on this idea of his.

    Thanks in anticipation

    Last edited by Hamster; 07-11-2012, 05:07 PM.

  • #2
    Re: Let to Buy

    Hi Hamster

    I do not know your personal circumstances but I would rarely advise anyone to have an interest only mortgage on their own home especially when you have no other way of repaying it, interest only on the Let to Buy is normal.

    According to most estimations house prices are not expected to rise much for several years so as a strategy I would not personnaly go for it my self.

    Hope this helps



    • #3
      Re: Let to Buy

      Good afternoon Hamster,

      Repayment is always the best option when it comes to your main residence - least then you can be sure your mortgage will be paid off.

      As for buy to lets - I always believe it is better to go with interest only in order to keep your payments down which will help during void periods.

      Interest only mortgages have been severely culled these past few months - with the only way of obtaining one for your main residence is if you have at least £100,000 equity - this is a typical case.

      That said - you could obtain an interest only mortgage and use the BTL as the repayment vehicle - but this is unlikely to work since it is unlikely that you would have enough equity in the BTL to clear your main residential mortgage?

      If you need any more help or advice please let me know.

      Thank you,
      Last edited by Sean.; 08-11-2012, 06:56 PM. Reason: Signature


      • #4
        Re: Let to Buy

        Thank you Jane and Sean.

        I think you're both right.