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Switching buy to let to residential

Written By:
Myles Robinson - Expert Finance Advisor

Posted: Oct 5, 2022

Switching a buy-to-let to a residential mortgage – Here is how to do it and why

There are many reasons to change a buy-to-let mortgage to a residential mortgage. You might find your BTL easier to commute from, or it better meets your living needs.

This article will discuss the options available to convert a buy-to-let mortgage to a residential loan.

However, if you have an existing residential mortgage and want to convert to a buy-to-let, see our article on switching to a buy-to-let mortgage.

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Can I convert my buy-to-let mortgage to residential?

You have the option to convert your mortgage from buy-to-let to a residential property mortgage deal.

You could have various reasons for this, such as returning to work and needing to return to the property.

Depending on the current lender, you may be able to remortgage your existing lender.

However, not all buy-to-let lenders allow you to remortgage onto your residential property.

Our specialist mortgage brokers deal with mortgages that range from residential to rental property buy-to-let. The mortgage broker works closely with lenders to understand your needs and what they are looking for.

You should inform your lender if you intend to move into the property before remortgaging. Otherwise, it could be considered a breach of the existing mortgage, and they may demand total mortgage payments.

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What affordability criteria do lenders consider?

It can be challenging to determine where you stand in today’s market because each lender has its own criteria.

First, consider your ability to pay the mortgage payment. This will also include how much income you earn per year.

Can you convert a buy-to-let mortgage into a residential one if you are self-employed?

For self-employed people, the lenders will use your SA302s (or accounts completed by an accountant) to determine the affordability. They’ll also consider your financial outgoings like credit cards, loans, and hire purchases when looking to get a mortgage approved.

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Is it affordable to convert from a buy-to-let mortgage to a residential one?

Employed workers will have the lenders review their pay slips and contract with their employer. They may also consider regular overtime and bonuses. Lenders may use 50% or 100%, which can vary from lender to lender.

They will lend you up to 4.5x your approximate annual income, but this can vary from one lender to the next.

Credit history is also essential. Some lenders may accept mild adverse credit (bad credit), such as late payments, but others will decline you if your credit score is low.

Talking to a specialist will give you a better understanding of your current position in the market. They’ll be able to discuss all options and conduct market research for you.

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What are the restrictions?

As we mentioned, not all buy-to-let lenders will allow you to remortgage to a residential property.
Lenders may request address history. Where were you when the property was bought to let?

Lenders may request that you keep open accounts, such as a bank account, to maintain your credit history in the UK if you’ve worked overseas.

Lenders may also be interested in the address history of the electoral roll.

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Is it legal to live in a buy-to-let home?

Although buy-to-let mortgages may not be unregulated in all cases, if you choose to sell your property to a friend or relative or live in it yourself, the sale will be subject to FCA regulation.

You will likely breach your mortgage terms and conditions by deciding to live in the buy-to-let home without consent to let from your mortgage provider.

Buy-to-let mortgages have several regulatory aspects. Your monthly rental income should be sufficient to cover your mortgage payments.

Your lender will be concerned if you live in the property. If this happens, the rent you receive will either decrease or cease.

What are my options for raising additional funds to purchase the property?

You may be able to remortgage your home up to 85-90 per cent if it is a residential mortgage or a buy-to-let mortgage.

It all comes down to the criteria of the lenders. To understand your market position when you change buy-to-let to a residential mortgage, it is best to speak with one of the specialists.

Speak with an exclusive mortgage expert about an existing residential mortgage, mortgage rates, switching mortgages, a current property mortgage and a standard residential mortgage.

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Are there higher rates for residential buyers who move from buy-to-let to residential?

It depends on what product you have with your current lender and the current rates.

While some older products have higher rates, residential products are at an all-time low with the Bank of England’s base rate.

However, you might be subject to lower interest rates if you want to switch to a residential mortgage or buy to rent.

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Is it difficult to switch from residential mortgage to buy-to-let?

To be completely honest, it all depends on your circumstances. Some lenders can be more complicated than others.

It may take longer if you have to approach a specialist lender for help. It is best to talk to one of our specialists to understand your situation about changing from a buy-to-let to a residential mortgage.

They will review your documents, such as payslips, to determine your affordability and credit reports.

To make it as easy as possible, they can also check which lenders might be interested in you.

I have low credit scores. Can I still get a residential mortgage?

Potentially, yes, Because every case is unique, it’s difficult to answer this question in one sentence. Your credit report is the most important thing. This will be the basis of any lender’s decision. It also depends on the reason you have a low score.

Bad credit, is it? Late payments, defaults, and CCJs are all examples. You might also have a bankruptcy, IVA, or debt management plan. Have you never had much credit in the past?

There are many options to convert your residential mortgage from buy-to-let to residential. The critical thing is to understand why you have a low credit score. A specialist can review your reports and help you determine where you stand in the market.

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Talk to an expert about buy-to-let mortgage switching

Relax, and let us find the buy-to-let broker who is the best fit for you. There is no fee, and you are not under any obligation when getting advice from our expert brokers that you will be speaking.

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