Changing from a residential to a buy-to-let mortgage

If you have a residential mortgage but want to switch to a buy-to-let mortgage, you will need consent from your lender. If they decline, you may need to think about remortgaging with a new provider..

Check eligibility for a mortgage

  • Free online mortgage broker
  • Mortgage in principle in 15 mins
  • Low interest rates
  • Free expert advice
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Switching from a residential to a buy-to-let mortgage

A number of scenarios may warrant a switch from a traditional mortgage to a buy-to-let one. These may include you deciding to move into your partner’s property while renting out your own, or inheriting an empty house with a residential mortgage that you wish to let out.

How difficult is it to switch?

For a permanent change of status to a buy-to-let mortgage, you will need to consider what type of buy-to-let mortgage best meets your needs. If your existing lender doesn’t offer a suitable mortgage for you, you may choose to remortgage with a different lender on a buy-to-let basis. However note that this can incur penalties, depending on your mortgage term.

In this case, you will need to go through the mortgage application process again, which comes with all of the same criteria, including credit scores, proving you can keep up with monthly payments and so on.

You will also need to be aware of the responsibilities associated with being a landlord and how you can prove to a lender that you will be able to fulfil these needs.

For instance, you will need to keep your tenants up to date with certificates and have all gas appliances serviced regularly. You will also need to prove that you can afford to fork out for unexpected costs, such as repairs.

You will also need to show that you can pay the income tax on your rental income after deducting your day-to-day running expenses and that you will be able to pay your mortgage if your property sits empty while you look for tenants.

What is a buy-to-let mortgage?

This is a loan for landlords who want to buy property to rent it out. The rules are similar to those around regular mortgages, but there are some key differences.

For instance, the fees and the interest rate tend to be much higher. The minimum deposit for a buy-to-let mortgage is usually 25% of the property’s value (although it can vary between 20 and 40%), and most buy-to-let mortgages are interest-only.

This means you don’t pay anything each month except the interest, but at the end of the mortgage term, you repay the original loan in full.

Can you live in a house with a buy-to-let mortgage?

Most buy-to-let mortgage contracts stipulate that the customer can’t live in the property themselves, under any circumstances.

So, if you live in your rental property while it is subject to a buy-to-let mortgage, you will invalidate your mortgage. If your lender discovers this, the worst case scenario is that they may ask you to repay your loan in full.

We recommend speaking with your mortgage lender and trying to come to an agreement. The lender’s decision will be based on whether your income is sufficient to meet their lending criteria, as previously they would have taken into consideration the monthly rental income when deciding how much to lend.

They will also check your annual income to see if you can continue to make your repayments. If you are refused, you will need to go to an alternative lender for a buy-to-let mortgage.

In any event, it’s imperative that you make your mortgage lender aware of your intentions before doing anything, as breaching your mortgage conditions could have some serious consequences.

Alternative options

If you will only be renting out your property for a short period of time, there are other options available to you:

Consent-to-let

This is a temporary agreement giving the borrower permission to rent the property out. This is usually over a 12-month period and is used for short-term or temporary changes in your circumstances, without the need to transfer to a buy-to-let mortgage. Learn more about consent-to-let here.

Let-to-buy

Let-to-buy mortgages are used when you live in a property and want to move elsewhere. This is a popular option with couples wanting to move in together, with each living in their own place. In this case, the couple could move into one of the properties and rent the other out temporarily by using a let-to-buy mortgage.

This means the couple will have two mortgages on the go, a let-to-buy deal for the current property that they will rent out in the short term, and a standard residential mortgage for the property they want to buy or live in together.

We show offers we can track - that's not every product on the market...yet. Unless we've said otherwise, products are in no particular order. The terms "best", "top", "cheap" (and variations of these) aren't ratings, though we always explain what's great about a product when we highlight it. This is subject to our terms of use. When you make major financial decisions, consider getting independent financial advice. Always consider your own circumstances when you compare products so you get what's right for you.

More guides on Finder

  • Monzo review: Is it worth it?

    Is Monzo’s app-only current account the right option for you? Read our review to get the low-down on all of the features of the account, its card and the app.

  • AppToPay review: How it works and if it’s right for you

    Find out how buy now pay later service AppToPay works and whether it’s the right choice for you and your next online purchase.

  • Klarna vs PayPal: Compare popular buy now pay later platforms

    Klarna and PayPal are two of the biggest names in the online payment industry. So which should you use for your next purchase? We compare the two.

  • NAGA review

    Find out what we thought of NAGA, a trading platform that lets you t trade more than 500 financial instruments and copy other people’s trades.

  • What is a good credit score?

    Find out the difference between a credit score and a credit report, plus the factors that can push your score up and down.

  • Agricultural mortgage

    What you need to know about getting a mortgage if you’re buying or refinancing a farm or farmland, including the factors lenders consider when you apply for one.

  • Mortgage for a pub

    Everything you need to know about taking out a mortgage to buy or refinance a pub. Find out where to get one, how to get the best deal and the factors lenders consider.

  • Mortgage for a hotel

    In-depth guide to taking out a commercial mortgage to buy or refinance a hotel. Find out how to get the best rates, factors lenders consider and what you need to apply.

  • Bridging loan vs commercial mortgage

    Find out if a bridging loan or commercial mortgage would suit you if you’re buying or refinancing commercial property and when a bridging loan can be a better option.

  • How much deposit do I need for a commercial mortgage?

    Find out how much deposit you need if you’re taking out a commercial mortgage, including the factors lenders take into account, and how to get the best deal for you.

Ask an Expert

You are about to post a question on finder.com:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked
Finder.com provides guides and information on a range of products and services. Because our content is not financial advice, we suggest talking with a professional before you make any decision.

By submitting your comment or question, you agree to our Privacy and Cookies Policy and Terms of Use.

Questions and responses on finder.com are not provided, paid for or otherwise endorsed by any bank or brand. These banks and brands are not responsible for ensuring that comments are answered or accurate.
Go to site