Are you confused about the difference between a buy to let mortgage and a let to buy mortgage?
If yes, then you have come to the right place.
Whether you want to broaden your horizons as a medical professional and invest in property or buy a new home for you and your family, the blog below will tell you everything you need to know about buy to let and let to buy mortgages for doctors.
What is a buy to let mortgage?
A buy to let mortgage is a type of mortgage that is specifically designed for the purpose of buying a property to rent it out to tenants. The amount that you are allowed to borrow will be largely dependent on the rental income that you are expected to earn from tenants, although other income revenues may be considered.
Buy to let mortgages are similar to ordinary mortgages, but there are a few key differences, such as higher fees, higher interest rates, and larger deposits required.
Why might you need a buy to let mortgage?
If you want to invest in property or start building your own property portfolio, then a buy to let mortgage can help you to do this.
As a general rule, to qualify for a buy to let mortgage, you need to be able to afford the risk of investing in property, own your own home (either outright or with an outstanding mortgage), have a good credit score, and earn over £25,000 per year. You also have to be under a certain age so that the lender feels confident that you can repay the entire amount over the course of your lifetime.
What are the benefits of a buy to let mortgage?
If you are thinking about becoming a landlord as well as a doctor, you will be pleased to hear that there are many benefits to getting a buy to let mortgage.
Firstly, property is a sound investment. Although the value of a house can go up and down, historically, property in the long term serves investors well.
You will also be able to generate an additional income from renting out your property or properties to tenants. However, you do need to make sure that you factor in maintenance costs.
Furthermore, the rental market is currently very strong, which means that you should have no trouble in finding good tenants, and it is highly unlikely that the property will be vacant for long.
Finally, with low-interest rates for savers, property can provide a much better return on investment and ensure you make the most of your hard-earned income.
What is a let to buy mortgage?
On the other hand, a let to buy mortgage is essentially the reverse of a buy to let mortgage. It involves you remortgaging your current residence in order to purchase a new residential property that you intend to live in. You are then able to keep your current home and rent it out to tenants to cover the cost of your new mortgage.
Let to buy mortgages are a great option for doctors who want to purchase a new home while still keeping hold of their existing property.
Why might you need a let to buy mortgage?
There are several reasons why someone who works in the medical profession may benefit from a let to buy mortgage. These include:
You need to relocate
If you have been offered a position at another hospital, private practice, or another healthcare setting, you might need to quickly purchase a new property in a different area. A let to buy mortgage allows you to release equity from your current home, which you can then use to put down a deposit on a new property.
Plus, if you do ever want to move back to your current location, you will still own the initial property.
You want to upsize
If you have recently enjoyed an increase in salary, then you may want to purchase a larger property for yourself and your family. If this is the case, a let to buy mortgage can help you to get the deposit you need quickly without the need to sell your home.
You can also benefit from a regular rental income which can help to cover the cost of your increased mortgage payments.
You want to live as a couple
If you own your own property but have decided that you would like to move in with your partner, then a let to buy mortgage can help you to purchase a property together without selling your home.
Or, if you both own your own properties, you could choose to move into one of them together and rent the other one out on a let to buy mortgage.
What are the benefits of a let to buy mortgage?
The most obvious advantage of a let to buy mortgage is that you do not need to sell your existing home to be able to buy a new property. This can be hugely beneficial if you are struggling to sell your current home and need to move quickly or if you think you may want to move back one day.
From a financial standpoint, a let to buy mortgage means that you will own two properties so that you can benefit from rising house prices, and you will receive a regular rental income.
How to find the best mortgage rates for doctors
If you are a doctor looking for a buy to let mortgage or a let to buy mortgage, then you need to find a mortgage provider that understands the complex nature of the profession.
While you may struggle to find the best mortgage deals, especially if you have not been practicing for long or you are a locum doctor, there are ways that you can still get a good rate.
A specialist mortgage broker that deals specifically with finding mortgages for doctors will be able to source the best rates for you. They will also be able to explain how your earnings work to lenders so that they are more likely to accept your application.
Here at Doctors Mortgages Online, we provide specialist mortgage and financial advice for doctors. Get in touch here today, and let us help you find the best mortgage for your needs.