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Changing a mortgage to a buy to let

Switching from a residential to a buy to let mortgage? Get the right advice here.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 22nd August 2019 *

This article is about remortgaging from a residential to a buy to let mortgage. See our article on switching a buy to let mortgage to a residential mortgage.


We have people everyday asking us things like “is changing my mortgage to buy to let possible?” In this article, we’ll explain how you can take your current main residence and remortgage it to buy to let.

There are a number of options available for people in this position. For instance, a let to buy mortgage is a remortgage of your current residential property into a buy to let, that you then rent out and purchasing a new property to live in.

Alternatively you could move into rental accommodation or stay with friends or family.

In this article we’ll cover:

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Is switching to a buy to let mortgage possible?

For many homeowners, the answer is yes.

Changing from a residential to a buy to let mortgage is actually quite common, but you will need your lender’s consent and they’re under no obligation to grant it.

If your mortgage lender is not keen on the idea of you switching your mortgage to buy to let, it may be possible to remortgage to another provider.

What is the criteria for remortgaging a main residence to buy to let?

When it comes to remortgaging to a buy to let mortgage, there’s different criteria for different lenders, and each can vary in the customers they do and don’t accept. The main considerations are…

  • Loan to Value and equity.
  • Affordability, (rental coverage & personal income)
  • Credit history
  • What will the onward living arrangements be?

The criteria is also very different depending on whether it is buy to let remortgage or the residential mortgage, both of which are outlined in detail below.

When does my onward purchase need to be completed if I’m remortgaging to buy to let?

Usually, yes. if you’re taking out a new residential mortgage and changing to a buy to let mortgage on the property you’re in the process of vacating, most lenders will want the remortgage to buy to let and the onward purchase completed at the same time.

This is usually because of the impact the additional mortgage payments will have on affordability - no rental income is likely to be made before it is switched over.

That said, each lender is different with their criteria and some can allow a grace period between completion dates, as long as the mortgage is affordable regardless.

Changing mortgage to buy to let: Affordability considerations

On the buy to let side of things, calculating affordability is ever-growing in complexity, with PRA regulation changing how lenders do business.

Based on the fact that remortgage buy to let mortgage rates are higher than residential, most lenders would want the rental payments for a property to cover the mortgage by 140% (e.g if the mortgage interest is £1,000 pm then the rent must be £1,400pm), where 125% is commonplace, meaning that lenders are offering far lower loan amounts to landlord across the board. Especially if you are willing to fix your initial rate for 5 years or more.

The PRA changes impact landlords to different degrees depending on the number of properties in personal name, and tax banding, as higher rate taxpayers will of course suffer from more tax and thus lower income yield from a rental property, meaning that the maximum loans affordable will be reduced.

Some lenders require a higher coverage more than 140% to ensure everything fits on affordability, so picking the right lender for you has never been more difficult; and getting the right specialist to advise you is even more important.

What are my options if I’m switching to buy to let?

There are several ways to change a mortgage from residential to BTL, including...

  • Let to buy mortgages
  • Moving into rental accommodation
  • Consent to let mortgages

Let to buy mortgage

If you’re moving to a new property and want to convert the one you’re vacating into a buy to let, one option is a let to buy mortgage.

These products allow you to turn your existing residence into a buy to let and move to a new home. Often customers will use the equity released when remortgaging to a BTL to serve as the deposit for the onward purchase.

Of course, because there are two properties, there’s often two mortgages involved – a buy to let remortgage and a residential purchase (unless you have the cash to buy the onward purchase outright); and handling these 2 mortgages at the same time in this manner has certain considerations.

This is mostly because affordability is impacted on both ends, and lenders on the buy to let remortgage and the onward residential purchase may have different policy when it comes to maximum loan to value limits and affordable loan sizes.

We strongly recommend allowing our expert brokers to handle both transactions to ensure it all goes smoothly.

Can I get a Let to buy with no onward purchase?

If you are looking to remortgage your own house for buy to let and you are not buying a new property, this may restrict the number of lenders who will offer you a mortgage. This is typically because the rules around buy to let mortgages have tightened up over the last few years and lenders are now going to great lengths to prevent “back door buy to let” scenarios (where borrowers were illegally taking buy to let mortgages on properties they always intended on living in, as they were easier to obtain).

Now, most lenders require landlords to have their own residential property before they can own a buy to let, and will need to prove personal affordability. Those who want to move out and not buy another property will also be asked to provide a very good reason as to why they want to pay rent elsewhere.

Thankfully, if you have a good explanation and affordability is no issue, there are several lenders that would be happy to consider your application. Make an enquiry and a specialist can run through your options!

How do I know the rental income of my let to buy

Valuing and getting evidence for the projected rental income of your let to buy property can seem difficult, but a quick search of your area in Zoopla/Rightmove should give you enough information to see what comparable properties in the area are renting out for.

You may also want to instruct a local letting agent to come and value your property for sale and rent before you decide to start the remortgage to give you a clearer idea, although this is not essential as the lender will want to do their own valuation on the property regardless.

Maximum loan to values for let to buy remortgages

When remortgaging your current home to a buy to let, lenders can limit the loan to value (LTV) in a different way to a straightforward buy to let purchases, and often this can be to 75% LTV (so a maximum £75k mortgage on a £100k property), however it is possible to go up to 80% in some circumstances.

If you have equity in the property already, then great, if not then you may need to put up some cash in to bring the balance down on the new mortgage.

This can come from savings or indeed gifts from relatives, but very rarely from personal unsecured borrowing such as loans/credit cards, as this is unacceptable risk for most lenders, and can also have an impact on your ongoing affordability.

One alternative option would be to get a “consent to let” from your current residential lender, where they give you permission to rent the property out and buy elsewhere, if you don’t have enough equity in the property.

Arranging a new residential mortgage for the onward purchase of a let to buy

The second element to a let to buy is the mortgage for the purchase of the residential property you’ll be moving into. How simple this is to arrange can depend on several factors:

  • How much equity is in your current residential property?
    As explained above, if you have more than 25% equity in the property then this should not impact the onward purchase, however if less than this then the new residential lender may require you to have a greater deposit for the property you buy, so the aggregate Loan to value (LTV) is acceptable.
    Thankfully there are still lenders who’ll do both mortgages up to high LTVs, with a maximum of 80 – 85% on the rental remortgage and 90% on the onward purchase residential property.
  • How much deposit will you have for the new purchase?
    If you have enough deposit in cash for the new purchase, then there’ll likely be no need to refinance the property you plan to let (unless you want to balance the LTVs to get the best deal on both properties – speak to your advisor about this!). If you need to raise deposit by refinancing the rental property then this lender can limit the LTV, and some want to know what the aggregate LTV is below a certain threshold.
  • Whether the rental income covers the monthly mortgage payments
    If the buy to let remortgage is affordable and suitably covered by the rent, then the onward purchase can be relatively simple as most lenders will ignore the mortgage commitment and the monthly repayments completely, assessing the new mortgage as if you didn’t have the buy to let.
    If there is a shortfall however, (as explained above) then the monthly commitment is likely be taken into account for your affordability assessment on the new purchase, which can lower your total loan amount – if this is close to the limit of what you need then it can cause real problems, and actually in some circumstances several residential lenders may even decline the application!

How much can I borrow for a let to buy purchase?

The focus on the affordability for a residential purchase will be your income for the year (as a guideline the lenders may lend up to around 4-5x your income), and then also taking into consideration if you have any financial outgoings, which may reduce the total maximum loan you can afford.

As each lender has a different affordability calculation and will view your income and outgoings in a different manner you will need to speak to the let to buy specialists we work with to get a better idea of where you stand in the market and to discuss the affordability with you in more detail, they’ll be able to find you the best deals available in the mortgage market.

What let to buy schemes are available?

There’s no real let to buy scheme available, it may be confused with shared ownership or rent to buy, where you can purchase a share of a property through a local housing association.

Let to buy is just a description of a particular scenario, where someone is letting a property to buy another, which is significant because every lender has different policy when deciding who and how they lend in these situations.

Changing from a ‘normal’ mortgage to buy to let and moving into rental accommodation

Some lenders are happy to offer a buy to let remortgage if the property owner is planning to move into rental accommodation. Others are wary of lending under these circumstances and will likely be concerned about the possibility of fraud.

Keep in mind that there’s a risk you might not be able to keep up with your own rent if your BTL goes unoccupied or your tenants' default. Lenders are also mindful of these risks, which is why your choice of approachable provider might be slim.

That isn’t to say finding a favourable deal is impossible. With the help of the whole-of-market experts we work, you can rest assured that you will have access to all of the best deals you qualify for - make an enquiry to speak with them today.

If your plan is to move to a new home and rent your existing property out, it’s always worth approaching your lending and requesting consent to let.

Certain mortgage providers are more flexible than others and will gladly allow you to rent your home to tenants on a residential agreement, although some will increase your interest rate or charge you a fee for the right to do this.

Lenders are under no obligation to accept consent to let requests, and if they decline, a buy to let remortgage would likely be a viable alternative.

Make an enquiry to speak with an expert advisor for more information.

What if your rental income isn’t enough to borrow what you want when switching from residential to buy to let mortgage?

If there’s a shortfall on the rental payments (i.e. if the property rents out at 500pm and you need £600 to cover the rental payments for the new mortgage) then this may mean you can’t borrow enough to remortgage the property to a buy to let.

In this situation there are a number of lenders that will allow a personal income to cover the difference, so long as your earnings deem the buy to let AND the new residential mortgage affordable. This is colloquially known as “top slicing”.

The new lenders assessing affordability for your residential mortgage are likely to also take the difference into consideration as a monthly commitment, which will affect how much you can borrow on the mortgage for the residential purchase. In this example, a £100pm additional commitment would need to be affordable to be approved for both mortgages.

The alternative is putting down cash either into the buy to let remortgage to reduce the balance.

What is the cost of stamp duty if I’m changing a residential mortgage to buy to let?

Following the changes to stamp duty in 2016, you may be liable for extra stamp duty on the new property purchase (if you’re using let to buy) because you will be buying a second property.

If you already own another property and are replacing your main residence, then you may be exempt from higher rates.

For an idea on the tax you’ll pay you can use the government Stamp Duty Calculator here.

I’m changing my mortgage to buy to let! Where can I get the right advice?

If you’d like to know more about remortgaging as a buy to let, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry here.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  – We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 22nd August 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Changing a mortgage to a buy to let

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