Specialist buy-to-let mortgages:
Let-to-buy
Moving home does not always mean selling the property you already own. Let-to-buy allows you to keep your existing home, rent it out and buy somewhere new to live.
It can suit homeowners who want to retain a property as a longer-term investment or move without waiting for a sale. The key is making sure the borrowing, rental income and timing work across both properties.
How let-to-buy works
A typical arrangement involves remortgaging your existing home onto a buy-to-let basis and arranging a residential mortgage for your new home. You may also release equity from your existing property to help fund the deposit.
Although these mortgages serve different purposes, they need to be considered together. The amount you can release from one property may determine what you can afford to buy next.
Equity and rental income
Having substantial equity does not automatically mean you can release all the money you need. Borrowing against your existing home will usually depend on both its value and the rent it can achieve.
The lender will assess whether the expected rent meets its rental coverage requirements, using its own stress rate. A valuable property with a relatively modest rental income can therefore support less borrowing than you might expect.
The available funds must also cover repayment of your existing mortgage, any early repayment charges and relevant fees.
Affordability for your new home
Your new residential mortgage will be assessed against your personal income, expenditure and financial commitments.
Lenders differ in how they treat the property you intend to let. Some may disregard its mortgage commitment where the rent meets their requirements; others may factor in a shortfall or require additional evidence.
This makes the choice of residential lender just as important as the choice of buy-to-let lender
Coordinating the move
The two transactions often need to complete together, particularly where money released from your existing home is funding the purchase.
Some let-to-buy lenders require a simultaneous onward purchase and evidence of your new residential mortgage offer. Applications, valuations and legal work therefore need careful coordination. Your solicitor will also need to arrange the movement of funds between the transactions.
Could consent to let be an alternative?
Your existing lender may allow you to rent out your home under a consent-to-let arrangement. This can be worth exploring if you do not need to release equity or would otherwise face a substantial early repayment charge.
Permission is subject to the lender’s terms, and your new residential lender must also be comfortable with the arrangement.
Costs and longer-term plans
Keeping your existing home can mean higher property purchase taxes on your next purchase. In England and Northern Ireland, higher SDLT rates will usually apply; Scotland and Wales have separate rules.
You should also allow for tax on rental profits, maintenance, insurance, letting costs and periods without rent.
We look at both properties together, helping you understand how much equity you can release, what you can borrow for your next home and how to coordinate the move.
Frequently asked questions.
Every client and every mortgage is different, but there are some questions we are asked regularly.
From affordability and deposits to complex income, expat mortgages and specialist property finance, our FAQs explain how different lenders may approach different circumstances.
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