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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: 16th October 2020*

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

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!

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Can I change my 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 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 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 a residential mortgage?

If you’re employed the lenders will work of your payslips 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 to 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.

Is it illegal to live in your buy-to-let property?

Buy-to-let mortgages aren’t always unregulated, but if you decide to let your property to a close friend or relative, or live in the property yourself, the sale will fall under FCA regulation. Therefore, it is highly likely that deciding to live in your buy-to-let property will be a breach of your mortgage terms and conditions.

As well as regulatory issues, buy-to-let mortgages are designed so that your monthly rental income covers your mortgage payments. If you are living in the property, the rent you get will either cease or reduce which will be of concern to your lender.

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 a 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 payslips 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 0808 189 2301 or make an enquiry online.

Then sit back and let us do all the hard work in finding the buy to let 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: 16th October 2020
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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 information 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.