The rise of the so-called 'accidental landlord' has been well documented, as the gap between sellers' expectations and the offers they actually receive has widened following the credit crunch.

For many people, whatever you thought your property was worth in 2007 bears no resemblance to its value today. But what if you are still not prepared to sell and you really want to move house?
Get a let-to-buy mortgage
A let-to-buy mortgage is very similar to a buy-to-let deal – but turned on its head.

With buy-to-let you take out a mortgage on a property that you intend to let to tenants. With let-to-buy you intend to let your existing home to tenants, and you plan to buy another home elsewhere to live in.


Your existing residential mortgage is effectively converted to a buy-to-let deal – based on the expected rental income, rather than your income. This frees you up to take out a new residential mortgage.

Why would you want to do this?
In the current climate letting to buy is an option for people who feel otherwise stuck in their home.

For example, you might need to move house because your family is growing and you need more space. If you can't achieve the price you want on your current home you might be unwilling to sell.

Perhaps you want to take advantage of lower prices to upgrade your family home, without having to accept them on your existing property (like having your cake and eating it).

Or maybe you simply haven't had any offers, but you need to move and you are confident you could easily let your home.

A let-to-buy mortgage means you are no longer restricted by your existing residential mortgage, so you can put all of your income towards a new homeloan.

Who does it suit?
Letting to buy is a good option if your existing property is in an area that is attractive to tenants. The rental market is currently booming with high tenant demand and average monthly rents above the £700 mark, according to LSL Property Services.

If you have a modest mortgage your rental income could cover your monthly repayments and, if you're lucky, give you a surplus.

It's also useful for those who are relocating with work and want to buy a place in their new location but don't want to let go of their existing home. Perhaps you think you will return to the area in the future, or you believe you could see decent capital growth on your property.

Mortgage matters
There are a handful of lenders offering specific let-to-buy mortgages, plus some specialist lenders allow you to take any products from their buy-to-let range on a let-to-buy basis.

To get one you will have to keep some of the equity in your existing property – usually around 25% (but some lenders allow 15%) – which may restrict the size of the deposit you can put down on your next home.

With both options, you will need to show that the achievable rental income will cover at least 125% of the mortgage payments – so the lender can be confident that you will be able to meet your repayments and set aside a little for maintenance and repairs.

Your interest rate will be more expensive than with standard residential deals, so your repayments may go up. However you might decide to convert your mortgage to an interest-only deal which could keep your costs down.

A temporary measure
What if you only want to rent out your existing home on a temporary basis?

You may be a contract worker with a 12-month gig at the other end of the country or perhaps you are taking a career break and travelling the world for a year.

In this case you probably don't want to buy another home right now, but you want to let your existing home to help pay the mortgage.

If you only plan to be away for a year or two, your existing lender may grant you 'consent-to-let' your home. They may charge you a fee for this, or insist you move onto a different interest rate.

Consent-to-let is also useful for those without sufficient equity in their homes to get a let-to-buy mortgage, but who want to let it out and buy elsewhere.

According to Ray Boulger, senior technical manager at brokerage John Charcol, you can obtain consent-to-let on your own home and get a new residential mortgage on another, providing you meet a range of different criteria.

He says: "It is possible but your choice of lenders will be restricted and you should expect to pay a higher rate of interest than with a mainstream mortgage. Some lenders will want to see that you have been renting your existing property successfully for at least 6 or 12 months before they will give you a new residential mortgage."

Take advice
Letting-to-buy is complex and an independent mortgage broker could prove invaluable. They deal with such specialist cases regularly and they know what different lenders are likely to offer you.

Plus the majority of lenders that operate in this niche sector only distribute their products through mortgage intermediaries, so you will not be able to access a deal directly from them.

Boulger advises: "Speak to a mortgage adviser in the first instance, because if you go to high street lenders they probably won't be able to help you and a credit search will be performed each time – this can affect your credit rating.

"Your choice of lenders will be limited and they all have very different let-to-buy criteria. A broker will be able to look at all of your circumstances, before working out which lenders are most likely to offer you a mortgage, and which can offer you the best deal."



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