I recently helped a self-employed client arrange a let to buy remortgage, allowing them to move into a new home while retaining their existing property as a buy to let investment. This type of arrangement can be useful for borrowers who want to upsize but also see value in keeping their current home as part of their wider property portfolio.
In a let to buy arrangement, equity in an existing property can be released and used towards the purchase of a new residential home. This can provide an alternative to saving a separate deposit for the onward purchase, particularly where a borrower has built up substantial equity in their current property.
The original property, which was to become a buy to let, was located in Central London and valued at £950,000. The new residential property had a value of £1.2 million.
A key consideration was the client’s employment status. As a self-employed borrower, they had two years of accounts available to demonstrate affordability. While this can make a mortgage application more involved, Enness regularly works with borrowers whose income does not follow a traditional employed structure and can identify lenders willing to take a broader view.
Another benefit of a let to buy structure is that the two mortgages can be arranged alongside one another, allowing the existing property to transition to a buy to let while the new residential purchase completes at the same time. Careful coordination was therefore important to ensure both parts of the transaction could progress together.
OUR SOLUTION
I identified suitable lenders for both elements of the transaction and structured the borrowing around the client’s circumstances. The buy to let mortgage was arranged at 75% loan to value (LTV), which was a strong result given the relatively low rental yields typically associated with Central London property.
I also secured a remortgage on the client’s existing property as part of the wider structure, while the new residential mortgage was arranged at 80% LTV. Both facilities were fixed for two years, providing the client with certainty over their initial repayments.
The outcome allowed the client to move forward with the purchase of the new home while retaining their existing Central London property as an investment. It was particularly pleasing to achieve this structure for a self-employed borrower with only two years of accounts available.
This case demonstrates how a carefully structured buy to let and residential mortgage arrangement can help borrowers make better use of existing property equity. Specialist lender access can be particularly valuable where income structure, affordability or the simultaneous completion of two mortgages creates additional complexity.
Disclaimer:
This case study is for illustrative purposes only and does not constitute financial, legal, tax or investment advice. Finance is subject to status, underwriting, affordability, property suitability and lender criteria. Terms, rates, LTVs and availability may vary depending on individual circumstances.
Risk Warning:
Your property may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured against it. Property values can fall as well as rise.
Information contained in our case studies is for market and illustrative purposes only. In some cases, these may be made up of multiple cases and are for illustrative purposes only.
Some case studies are made up of enquiries that have come into the business, not all business completes, and the posting of a case study does not represent a completed piece of business.
Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
