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Let to buy mortgage
Several years of low interest rates have forced would-be investors to find ever more ingenious ways of making a return on their money. If you have a large lump sum, buying a house and then renting it out has always been an attractive way of making your money work for you - it offers the security of bricks and mortar combined with the assurance of a steady return.
In the last few years there has been a boom in the practice of buying rental properties as an investment opportunity. And in response to rapidly increasing demand, the creation of the buy to let mortgage has made it easier than it's ever been to do so.
But in a novel twist, it became possible to buy a new home - possibly in another part of the country - while retaining your old one as a rental property.
The increasingly popular let to buy mortgage is a way of allowing homeowners to do just that. The advantages are obvious: you retain equity in both homes, and the income from your original home - with luck - will not only pay the mortgage on that property but may even help pay for your new home as well.
Over time, let to buy can be used as a way of building up a portfolio of rental properties, with all the financial advantages that implies.
As with any mortgage there is a bewildering array of options to choose from. Depending on your view about what is likely to happen in the financial markets, you may want to choose from fixed rate, capped, variable rate, base rate tracker discount or even LIBOR linked - each offers a different hedge against fluctuations in interest rates.
It is important that you make it clear to all prospective lenders that you are intending to use your home for rental purposes and buy another property. And it is sensible to consult an independent mortgage adviser who will be able to recommend a mortgage deal suited to your circumstances.
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