Switching to a buy to let mortgage

About Martin Alexander

Martin has been a mortgage advisor for over 15 years. Start your mortgage enquiry by filling out our quick form or give us a call on 0800 195 0490. mortgage reviews

Switching from a residential mortgage to a buy to let mortgage is very common. A number of 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, then a remortgage may be an option with an entirely new lender. This can incur early redemption penalties, depending on your mortgage term.

Switching mortgages usually depends on the below:

  • Current mortgage type
  • What your intentions are 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 does take careful consideration and isn’t something to rush. Do consult a specialist advisor if you’re unsure. You can ask our experts a question at any time and check to see if you qualify.

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…

On the other hand, you may have overpaid for your existing home and have tried selling, 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 that a lender takes on. 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 for options, you could consider a bridging loan, however do proceed with caution and only use 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. Not every lender will be happy to consider switching. This is because buy to let mortgages are usually offered to existing homeowners who have at least a residential mortgage.

Rent can be higher than a mortgage repayment and if your tenant defaults on paying the rent, you could be in financial difficulty. Lenders are aware of the additional risk, so may decline.

Getting the best mortgage rates

Getting a great mortgage rate is paramount when switching mortgages. If you’re already on a great rate, then applying to your current lender for consent may be your best option. Your lender may agree to simply transfer your mortgage rate on to another property. If your lender doesn’t agree, then consult an advisor to check what rates and mortgages you’ll be eligible 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.

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