The question is ‘Can you buy a second property and get consent to let on the first?’ This is a complex issue and there are a number of factors to consider.
What is consent to let?
If you approach your mortgage provider, some may agree to give you ‘consent to let’, which will allow you to let your home. But be aware that it is considered a temporary measure, not a long-term agreement, usually between 6 to 12 months.
Their criteria for granting ‘consent to let’ could include you moving far away for employment (those in the military are often given ‘consent to let’ if they are sent away on an extended deployment). Or some people may be getting married and moving into their partner’s home.
All lenders are different, so be aware that there may be fees to pay or additional interest incurred.
Can you live in the second property?
If you have a standard residential mortgage, then yes. If it’s a buy-to-let mortgage, then no.
If you can afford it, buying the second property with a residential mortgage, and then converting the first property from residential to buy-to-let is a relatively simple process.
The downside is that you will need to prove to the mortgage provider that you can afford two mortgage payments. With a buy-to-let, the income generated by the rent is taken into account.
Would you need to remortgage your first property?
Yes. This could be done through your existing mortgage provider, or a new lender, depending on who offers the best deal. The new mortgage would have to be a buy-to-let mortgage.
If you intend to rent out the first property indefinitely, then an option might be an interest only mortgage. This will reduce repayments, but leave you having to pay the principle at the end of the mortgage term.
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Do you need to tell your mortgage provider you intend to let out your property?
Yes! If your first home is a standard residential mortgage, then you would be in breach of the mortgage terms and conditions if you decide to let the property. The lender could terminate the mortgage and request full payment of the debt in full.
What other costs could be involved?
Apart from the usual solicitors’ fees and valuations, a rental property can incur costs including –
- Landlord insurance
- Agency letting fees
- Gas safety certificate
- Energy performance certificate
- Smoke alarms
As with any major financial decision, it is vital that you speak to an expert, for the best advice to help you make the right decisions.
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