Mortgage Advisers
July 2025
What a beautiful July we've landed in, the sun is shining and the property market just keeps trucking along.
We'll get started by taking a look at the property market in June & beyond.
I'll also look at the option of Let-To-Buy, which is where instead of selling your existing property, you remortgage to extract funds and then purchase your next property while retaining your existing property as Buy to Let.
Latest News
This month we saw the Bank of England hold the Base Rate at 4.25%.
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This didn't come as a surprise; most economists were predicting the hold. This was simply because inflation rose to 3.4% (up from 2.6% in March), and with the unrest in Iran affecting oil prices, the Bank of England wisely opted for stability to see how this all played out.
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Economists are still predicting that the Bank of England Base Rate will reduce to as little as 3.75% as inflation reduces toward the end of the year.
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The labour market has weakened over the last year, although this is not happy news, this will have a positive impact on inflation figures which have been largely impacted by increases in salaries. ​
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On the property market, we had all been expecting a reduction in new home completions since the Stamp Duty was increased in May, and that has certainly become apparent.
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The market feels stable, but there are a lot of properties on the market that are not moving very quickly. This is certainly a good time for first-time buyers to put in a cheeky offer or for homeowners to think about strategies to take advantage of more flexible pricing.
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Overall, the market is quite stable, really. This has been the case for quite some time; there have been no dramatic shifts, which is good news for buyers.
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Interest rate reductions mean that mortgage payments are more comfortable and affordability is gradually improving it could be a really good summer to press ahead with plans before the rush in September.
Mortgage Rates Today
What is Let to Buy?
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We've all heard of Buy to Let, when you buy a property to rent it out. A Buy to Let is essentially a business transaction; this property was bought to offer a profit and investment.
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Today we'll look at Let-to-Buy. As the name suggests, it's similar but different.
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Let to Buy is a term used for a property that is being let in order to purchase your next home. I'll give an example.
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Joe has been living in his one-bedroom flat for seven years, the property is worth £250,000 and he has a £50,000 mortgage still outstanding, which means he has a whopping £200,000 of equity that should be available. ​
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Three years ago, Joe met Sally, they became pregnant and now their Daughter is a one year old. ​​
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While Sally was pregnant they put the flat on the market as they needed more space and wanted a garden.
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The property sat on the market for over a year without a suitable offer. Now the baby is coming up to the age where they really need to get a move on, as she needs her own room. They were thinking about just starting again and keeping the flat to rent out, but they don't have a deposit saved as they were going to use the equity in the flat.
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This is a perfect case to explore Let to Buy.
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This solution will allow Joe & Sally to remortgage their existing flat and convert it to a buy to let - renting this on the open market.
During the remortgage process they would release some equity to use as a deposit for a more appropriate property and be able to move on, chain-free.
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Let us take a look at what would be available to them for their onward purchase and if it makes sense financially.
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Property Value: £250,000
Equity: £200,000
Existing Mortgage: £50,000
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Expected Rental Income: £1,250
For this property, the mortgage affordability would be up to £188,000. This would give Joe and Sally £138,000 to use toward their onward purchase.
The Mortgage Payment, on an interest-only basis would be £762.97. With the rental income at £1,250 this would allow for £487.03 per month of profit before expenses and tax.
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The rental income will cover the mortgage payments and would have a lower effect on their affordability for their new purchase.
Now, tax is a good thing to think about here. There will be tax implications and, so I would always recommend speaking with a tax advisor while in the discovery phase for this approach.
They could also decide to reduce the level of lending on the flat, depending on how much they would need for moving expenses. They could also decide on a capital repayment mortgage instead of interest-only keep the flat in the background as an asset.
If Joe & Sally chose a capital repayment mortgage, the monthly payment would be £933.28 over a 35-year term
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This is obviously a fictional situation, but something we see all the time, especially in a market where flats are difficult to sell, but easy to let.
If you'd like to talk about your own circumstances and see if this could be useful to you, please get in touch anytime and we'll map it all out for you.
Jen Boulter