Published 9th September 2019 · Updated 1st July 2024 by Martin Alexander
Switching from a residential mortgage to a buy-to-let mortgage is very common. Many scenarios can warrant a mortgage switch, such as moving home or having an empty house under a residential mortgage.
If you have a residential mortgage but want to switch to a buy-to-let, you will need consent from your lender. If your current lender declines, a remortgage with an entirely new lender may be an option. Depending on your mortgage term, this can incur early repayment charges.
Switching mortgages depends on the following:
- Your current mortgage type
- What you intend to do with the property
- Your future living arrangements
- Other mortgages you have
- Terms of your current mortgage
- Lender consent
How to change your mortgage to a buy to let
As this is a financial matter, switching mortgage types requires careful consideration and isn’t something to rush. Do consult a specialist advisor if you’re unsure. You can ask our experts questions at any time and check to see if you qualify.
A buy-to-let mortgage is completely different from a residential mortgage. You may want to maximise your rental income for instance, where this previously wouldn’t have been an option. Our advisors can instantly check to see what buy-to-let rates you’ll qualify for and run through the differences with you.
If you simply change your mortgage with your current lender, you’ll only be shown their rates. This will limit you to just one lender, so you won’t have the option of choosing the best mortgage you’re eligible for. Our advisors have access to every UK lender, so you’re guaranteed to switch to the best rate available.
Buying a new home and switching your existing home to a buy to let
Switching an existing residential mortgage to a buy-to-let and then purchasing a new home is very common. Mortgages such as these are called let to buy mortgages. Rather than selling your existing home, you could rent it out.
You could also remortgage your existing home to fund the purchase of your new home. The additional rental income could then subsidise your new residential mortgage – now we’ve got you thinking…
In comparison, you may have overpaid for your existing home and have tried selling it but simply can’t sell for the price you believe it’s worth. The next best option is to hold the property, switch to a buy-to-let mortgage, and then wait until the value increases enough to warrant selling.
Not all lenders will entertain this arrangement. Again, this is because of the amount of risk a lender takes. If a tenant stops paying rent or you have a large unexpected maintenance bill on your rental property, it could cause financial strain. If you’re really stuck on options, you could consider a bridging loan, but do proceed with caution and only use it as a last resort.
Getting a buy-to-let mortgage and moving into rented accommodation
If you currently have a residential mortgage but want to move out and rent a property instead, there are lenders available. That being said, not every lender will be happy to consider switching. This is because buy-to-let mortgages are usually offered to existing homeowners with at least one residential mortgage.
Rent can be higher than a mortgage payment and if your tenant defaults on paying the rent, you may experience some financial difficulty. Lenders are aware of the additional risk, so may decline.
Finding the best mortgage rates when switching
Getting a great mortgage rate is paramount when switching mortgages. If you’re already on a great rate, applying with your current lender for consent could be your best option. Your lender may agree to simply transfer your mortgage rate to another property.
If your lender doesn’t agree, speak to an advisor to check what rates and mortgages you’ll be eligible for. Even if your lender does give consent, it’s still worth checking to see what rates you qualify for.
An advisor will also do their best so that you can keep your current deal, especially when available rates are higher. You can view current mortgage rates here. Call us now on 0800 195 0490 or make an enquiry below to get started.
Need a mortgage?
Find out if you’re eligible. It takes less than one minute and doesn’t affect your credit score.
About the author
Martin Alexander
Martin is a senior mortgage advisor who has held a CeMAP qualification for over 15 years while completing an MBA in Global Banking and Finance.