Buy-to-let mortgage guide Let-to-buy mortgages

Hands holding two model houses

With let-to-buy you use rental income to cover your mortgage repayments

We explain how let-to-buy works, and how to get a let-to-buy mortgage.

If you want to move house but are struggling to sell, or are unhappy with how much your property would fetch in the current market, let-to-buy could be a good option.

Let-to-buy: how it works

Let-to-buy allows you to move house without selling your current home. Instead of finding buyers, you let your existing property out, and use the rent to cover your mortgage repayments. You then take out another mortgage to buy your new property. 

Let-to-buy will only work if either:

1. You have a deposit saved up and can afford to buy a new property without selling your current home. 

2. You have equity in your current property that you can release by remortgaging to use as a deposit. 

  • If you're trying to decide whether let-to-buy could work for you, call Which? Mortgage Advisers on 0808 252 7987 for impartial, expert advice based on your personal circumstances.

Remortgaging for let-to-buy: examples

Let's imagine you bought a property five years ago which was worth £150,000, but it's now worth £170,000. You will have an extra £20,000 of equity you can release if you remortgage at the property's current value. 

Even if your property hasn't increased in value, you will have paid off a decent chunk of mortgage capital in the past five years.

For example, if you bought your property with a £30,000 deposit and a £120,000 capital repayment mortgage, after five years on a mortgage with a 4% interest rate you would have repaid about £15,000 of capital. This means you'd now own £45,000, or 30%, outright. 

Getting a buy-to-let mortgage

For both of these options you will need to get a buy-to-let mortgage on your current property, which can be tougher to get than a residential mortgage.

Because there is a greater level of risk for lenders with this kind of loan, their requirements tend to be higher. You will typically need a deposit of at least 25% and buy-to-let mortgages are often more expensive in terms of interest rates. 

Lenders will want to see evidence that you will be able to comfortably cover the cost of your mortgage - normally by showing your rental income will be at least 125% of your repayments. 

Find out more: check out the latest buy-to-let mortgage rates from Which? Mortgage Advisers.

Consent to let

If you think let-to-buy is only something you will do in the short-term, your lender may allow you to let out your current property with ‘consent to let’ on a residential mortgage. Lenders will typically only allow this as a temporary arrangement, for a few years maximum. 

Each lender will have different consent to let requirements. They may also charge you additional interest and you will typically have to pay some admin fees. 

A limited number of lenders also offer special let-to-buy mortgage packages, which cover both the buy-to-let mortgage on your current property and a new residential mortgage for the property you want to buy. 

  • Call the impartial experts at Which? Mortgage Advisers for one-to-one advice on the best option for you: 0808 252 7987

Let-to-buy risks

There are some risks involved in let-to-buy. For a start there is no guarantee your house will increase in value; it may even drop while you are waiting to sell - so you could lose money. 

Becoming a landlord is also not a decision to be taken lightly. There are financial costs and the impact on your time to consider. You may struggle to get enough rent to cover your mortgage repayments or have problems with your tenants, which can make for a stressful experience.

Our becoming a landlord guide covers some of the things you will need to consider when letting out property. 

Finding a mortgage to buy a new home

You should also consider the costs involved in buying a new property to live in. You should shop around to find a mortgage deal that suits you.

Bear in mind that the fact that you already have a mortgage may make you seem more risky to a lender and you may pay a higher rate of interest that someone unencumbered by an existing loan.

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Your home may be repossessed if you do not keep up repayments on your mortgage.

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