How to switch your mortgage from buy-to-let to residential

If you want to live in your buy-to-let (BTL) property permanently, you will need to switch from a BTL mortgage to a residential mortgage before doing so.

Your first step should be to inform your existing BTL lender of these changes to your circumstances and see if you can come to some sort of arrangement.

How do I switch my mortgage?

Once you have spoken with your lender, you will know if they can help you switch.

If they can, you will be able to remortgage to a residential loan with them, which will be based on your personal income and creditworthiness.

But if your existing lender will not allow you to remortgage with them, you will need to do your research on alternative lenders. In this case, it’s best to get in contact with a regulated mortgage adviser to ensure that you find the right residential mortgage for your situation.

Generally speaking, how long the remortgaging process will take depends on the lender, as some can be trickier than others. For instance, if you need to approach a specialist lender, it may take longer for things to go through.

What happens if I don’t switch mortgages?

It’s likely to be a condition of your BTL mortgage that the property is only let to tenants, and not lived in by you.

If you do move into your BTL property without switching to a residential mortgage, you could be committing fraud and the consequences could be dire. Your lender would be well within its rights to ask you to repay your mortgage in full.

Do lenders treat BTL and residential mortgage applications differently?

BTL mortgage rates tend to be higher than those for a residential mortgage as they constitute a higher risk for mortgage providers, which is likely to bring more rigorous checks for those applying for a BTL mortgage.

This means that the amount you can borrow in relation to the value of the property is generally lower for BTL mortgages.

For instance, the maximum you could hope to borrow is typically around 80% of the property’s value, which means you would need at least a 20% deposit, compared with a residential mortgage where you could borrow 95%.

Not only are BTL mortgages more expensive than residential mortgages when it comes to interest rates, but arrangement fees can be a lot higher, too.

There are also differences in how affordability is assessed. For a residential mortgage, income from employment, pension, benefits and a myriad of other sources is used to determine whether you can afford the mortgage repayment.

For a BTL mortgage, while income is still used to determine if you will get the mortgage and under what terms, it is usually assessed as a percentage of the mortgage payment – typically at least 125%, but this can be as much as 145% of the mortgage payment.

Given stricter BTL lending criteria, these mortgages are often considered to be harder to get than residential mortgages.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
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