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Changing From a Buy to Let to a Residential Mortgage

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By Pete Mugleston   Mortgage Advisor

Last updated: 9th September 2018

This article is about changing from a buy to let to a residential mortgage. Click here if you want to change from a residential to a buy to let.

There are a whole bunch of reasons for changing buy to let to residential. A change of job might made your BTL more convenient to commute from or you might even think your main residence would generate better returns as a buy to let.

In this article, we’ll discuss what options you may have with changing a buy to let mortgage to a residential mortgage, we also ask the experts following a few frequently asked questions!

How to change a buy to let mortgage to residential

There are options available to change your buy to let mortgage to a residential property.

This could be for a few different reasons, an example of this could be you’ve been working away and are moving back and want to move back into the property.

Now depending on your lender, you could potentially remortgage with your current lender but not all buy to let lenders allow a remortgage onto a residential.

The specialists we work with deal with changing mortgages from buy to let to residential on a daily basis, they work closely with the lenders and understand what the lender will be looking for and what you need!

If you move into the property before remortgaging you would need to inform your current lender first, otherwise it may be considered a breach of your contract and some could demand full and final repayment, which would be financially disastrous.

The other side is that changing buy to let to residential mortgages are usually attract a lower interest rate , so you could actually be saving money by informing your lender as sooner rather than later.

What affordability do the lenders look at?

As each lender has different criteria it can be hard to know where you stand in the current market.
If you’re going to change from buy to let mortgage to a residential a residential mortgage lender will first be looking at your affordability, so what income you receive per annum.

Can you change buy to let mortgage to residential if self employed?

If you’re self-employed the lenders will work off your SA302’s or accounts completed by an accountant to decide on the affordability, they’ll also take into consideration your financial outgoings such as credit cards, loans and hire purchases.

How affordable is it to switch buy to let to residential mortgage?

If you’re employed the lenders will work of your pay slips and contract with your employer, they may take into consideration regular overtime and regular bonuses you receive, some lenders may use 100%, some may only use 50% so it does vary from lender to lender.

Generally, for the affordability as the market is today they’ll lend up to around 4.5x your income for the year, some lenders may stretch that affordability to 5x but it really does vary between each lender.

Your credit history will also be key, some lenders may accept light adverse (bad credit) such as the occasional late payment, while some lenders will decline if you’re credit score isn’t top marks and gleaming!

To get a better idea of where you stand in the current market the best way to do that would be speak with the specialist, they’ll be able to discuss all the options available and research the whole of the market for you.

What restrictions are there?

As mentioned above, not all buy to let lenders allow you to remortgage onto a residential product as they may not offer the residential products!
Some lenders may ask for address history, where were you living while the property was on a buy to let?

If you’ve been working overseas for example and are now moving back and want to change your buy to let to a residential some lenders may ask that you’ve kept some accounts open such as a bank account to keep your credit history ongoing in the UK.

The lenders may also want to see the address history on the electoral roll.

Can I raise additional money on the property?

The short answer will be yes!

If you need to raise some additional funds to complete home renovations for example, providing it fits with the lenders affordability and their loan to value (LTV) you could potentially remortgage up to 85 – 90% LTV if you’re switching from a buy to let mortgage to residential.

This is all down to the lenders criteria, so it would be best to speak to one of the specialists to understand where you stand in the market when changing buy to let to residential mortgage.

Will I face higher rates if I change from buy to let to residential?

Not necessarily, all depending what product you’re on with your current lender and their current rates.

Some older buy to let products do have higher rates but on a residential product they are at an all-time low with the base rate of the Bank of England, in terms of specific interest rates that’s not something we can cover in this article as this is all based on your personal circumstances and which lender you can approach but you may face lower interest rates if you are looking to switch your buy to let to a residential mortgage.

How difficult is it switching from buy to let to residential mortgage?

It all depends on your personal circumstances to be honest. Some lenders can be trickier than others, if you need to approach a specialist lender, they make take longer for things to go through, so it would be best to speak to one of the specialists we work with to really understand where you stand in the market in terms of changing from a buy to let to a residential mortgage.

They’ll be able to review a copy of your documents such as pay slips to assess the affordability and credit reports to make sure your credit report fits with what the lenders will be looking for and to see exactly which lenders they could approach for you, to make the process as smooth as possible.

I have a low credit score; can I still change buy to let mortgage to residential?

Potentially yes! It’s hard to answer in one paragraph as every case is different. The key thing would be your credit reports as this will be one of the main things the lender will base their decision on, it also depends on why you have a low credit score. Is it due to bad credit? Such as late payments, defaults, CCJ’s? Or a previous bankruptcy, IVA, debt management plan? Or have you not had much credit before?

There are potential options available to change buy to let mortgage to residential, and as mentioned above the key thing would be why the credit score is low so having the specialist review your reports to see exactly where you do stand in the current market.

If you like anything in this article or you’d like to know more, call Online Mortgage Advisor today on 0800 304 7880 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: 9th September 2018
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