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Change a mortgage to buy to let easily

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Aug 12, 2022

How to change a mortgage to buy to let quickly and easily

This article is about switching from a residential mortgage to a buy-to-let mortgage. See our article for information on converting a buy-to-let mortgage to a residential mortgage.

It is possible to convert from a residential mortgage into a buy-to-let agreement. However, there are essential things that you need to consider before proceeding.

The likelihood that your lender will approve your move will depend on your current mortgage, the type of mortgage secured against the property, the purpose of the property (to who it’ll be rented), where you plan to live in the future, and the number of properties you have.

This guide is for anyone considering switching to a buy-to-let mortgage. It will help you make an informed decision and find specialist mortgage advice from a mortgage broker.

We have a few mortgage providers lending a residential mortgage to buy to let mortgage and every other investment mortgage on the market. Our market financial advisers provide advice free of charge. They can help move from a current mortgage lender and pretty much anything you wish to do concerning a mortgage.

Enquire here to speak with a mortgage advisor…

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Modifying a mortgage to buy to rent

You will need to convert a residential mortgage into a buy-to-let mortgage. Either switching can do this from a residential to a buy-to-let agreement with your mortgage provider or remortgaging and changing product type with another lender. The ability to convert your residential mortgage to a purchase-to-let mortgage will depend on your property type, your personal circumstances and the terms and conditions in your original agreement.

It will ultimately be up to the mortgage provider whether they consent to your request.

Moving into a rental property after converting a primary residence to a buy-to-let home

Some lenders may not allow you to convert your residential mortgage to a buy-to-let mortgage if you are planning to move from home to a rental property. Although it sounds odd, some lenders might not be willing to offer this service. The lender may be concerned about the risk of the borrower defaulting on their loan.

This is also because some buy-to-let lenders are suspicious of fraud. Customers may ask to convert their mortgage to a buy-to-let with the intent of living in the property and earning income from tenants.

A lender will ask you to show proof of your rental income to change your mortgage type. Your interest rates could increase if you buy-to-let. To determine if you can afford the monthly mortgage payments, your rental income should equal 125-140% (at the time you write).

You may not be getting the best buy-to-let rates if you remain with your current lender. Ask for a better deal.

Change of the main residence for buy-to-let and purchase of a new property

We are often asked to help customers rent out their existing property or buy a new one. This is partly due to low-interest rates on savings at the bank and people looking for ways to save more money.

This could also be due to the decline in house prices. There is a consensus that property values will increase over the next few decades. Customers who can take out two mortgage products favour renting rather than selling in the short term.

This can be done in two ways: a mortgage to purchase or consent to let.

Below, we break down the differences between these options.

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Mortgages for sale

A let-to-buy mortgage allows you to purchase a new property and rent out your existing property by changing your mortgage to a buy-to-let.

If you have enough equity in your property, you can raise cash to finance a buy-to-let deposit for the new purchase.

This is a buy-to-let second-charge mortgage. It’s a secured loan that allows you to borrow up to the equity in your property. So it might be an option if you need funds to make a deposit. Send an enquiry today for more information about second-charge loans.

Lenders have concerns about let-to-buy arrangements. This is because there could be a risk to their security if there’s a gap in the tenancy or borrowers are forced to pay both mortgages. The trouble is magnified if prospective landlords have no rental experience or any other income.

Consent to mortgages

You may have a great mortgage deal, some tracker deals being under 1% at the moment. It might be worth asking your current lender permission for the property to be let out under the existing mortgage contract. This will allow you to transfer the debt from one place.

Although they aren’t required to accept it, it is worth considering, especially if you intend to rent, buy a property in cash, or transfer an existing mortgage (see below).

If your application is denied, you must remortgage into a buy-to-deal.

A consent to let mortgage can still technically signify that your rental property is subject to a residential mortgage. This can affect which lenders will offer you a mortgage for your next property.

There is a limit on the number of residential mortgages you can get, but some lenders will allow up to two. Some lenders may be willing to lend as many as four, provided you prove your affordability.


Is it legal to rent out a property if there is no buy-to-let mortgage

Although technically legal, you may violate your mortgage lender’s contract. Mortgage lenders may demand that the entire mortgage be immediately paid if you let your property without making the mortgage a buy-to-let.

Notifying your mortgage lender immediately will help to avoid this. This applies even if you are an “accidental landlord”, such as if you have to move but can’t find a buyer or want to rent it out while you wait. If you become an “accidental landlord”, a consumer buy-to-let mortgage may be appropriate.

What is the best time to remortgage your home so you can buy-to-let property?

It all depends on the mortgage lender. Some lenders won’t allow you to remortgage after six months, but it may be extended in some cases. Depending on the length of time that the property has been in your possession, consent to let might be limited.

Is it more expensive to buy-to-let mortgages?

Buy-to–let mortgages typically have higher associated costs than residential mortgages. However, this depends on the lender’s calculation and your personal circumstances.

Expect to pay a higher deposit (25 per cent of the property’s actual value) and to pay stamp tax and possibly higher fees. Higher mortgage rates could be expected, mainly if the loan-to-value ratio is higher. This is because the lender would have to recover more money in case of default.

We also have a guide to what a buy-to-let mortgage is if you want to learn more about how they work.

For more information on the costs associated with buy-to-let mortgages.

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