Let to Buy - am I being conned?

[howdypartner]

Been speaking to a mortgage adviser as we need to get a mortgage on the (mortgage free) property we are living in to buy a new residential home. We are going to rent our current property when we move to the new place. He says we need a let-to-buy not a buy-to-let and that the rates are never that good. He's suggested 4.19% fixed for 2yrs, which isn't good, and he wants £500 commission. Is he just suggesting this as he's getting a kick-back from the mortgage company? Or is he right that we have to have this kind of mortgage and that the rates for this are worse than BTL or residential?
Thanks

Unless you have a decent deposit for the BTL then this is right. 4.19 is not bad for that type of mortgage but there may be better deals, try another broker and see.

Have you any reason not to trust this man? The industry he is in is heavily regulated and it is normal to receive a procuration fee from a lender as well as to charge a fee himself. Let to buy is considered more risky than BTL and many lenders insist on having 6 months rental history before lending, so they are a little harder to find.

Thanks both. No reason not to trust this man, apart from not being convinced that brokers always offer the best deal because some lenders provide them with better incentives than others. Think we'll just have to suck it up and change to a BTL as soon the LTB fixed period ends.

If you want to reduce the overall cost, it may be worthwhile trying to reduce the amount of loan on the LTB property, as you rightly point out residential rates are better.

Could you borrow the deposit for the new property (eg 30%) as an LTB, and the rest against the one which will be your home? Is there any reason why you couldn't get a residential mortgage on the new place (credit score, subsidence, your earnings etc.?)

This will likely result in you paying higher fees to the adviser but if the total cost to you is less may still be worthwhile. In fact for that reason I'd be surprised if he hasn't already considered it. Check, though.

My daughter is doing this. They are taking out two mortgages - one a buy to let on the smaller flat they are going to start letting out where they currently let and a second mortgage on the bigger place they are going to move into. On both loans they have got 3% something as the rate although they are both in banking and have a good broker so I expect they have found some good deals and have capital for the deposit on the new place.