Can I Change My Residential Mortgage to Buy to Let?

Yes changing a mortgage to buy to let is possible. Let's break down how it works. 

How to Change Your Mortgage to Rent Out Your Property 

There are 2 main options when you want to let out a property with a residential mortgage on it – either you obtain consent to let from your current lender, or you remortgage onto a buy to let product. What suits you best will depend on why you want to let out your property and for how long.  

 People often want to let out their property because:  

• They’re moving into a new property with a partner  
• They’re moving to a new area because of work  
• They’re travelling  
• They’re going to be away from their current home for a notable period of time  
• They want to purchase a new home  

Whether you opt for consent to let or a buy to let remortgage, changing a residential mortgage to a buy to let isn’t quite the same as a normal residential remortgage. 

This is because: 

• You don’t remortgage at all with consent to let. The whole point is that you stay on the same product with the same lender – although your lender may introduce some new terms and conditions 
• Buy to let mortgages involve a different method of assessing your affordability from residential mortgages. Your affordability is worked out using your expected potential rental income from the buy to let, as opposed to your personal income which is used for a residential remortgage 

We go through when consent to let is possible, how it works, when changing your mortgage to buy to let is more suitable and how the lender assesses your affordability, below. 

You can also find more information on buy to lets in our buy to let mortgage guide. 

Do I Need Consent to Let from My Mortgage Lender? 

When you rent out a property with an existing residential mortgage on it, you need to obtain consent to let from your lender. This is because residential mortgages are fully regulated by the FCA (Financial Conduct Authority) but buy to let mortgages are not regulated, so you can’t let out a residential property without their permission or you risk breaching the terms of your mortgage.

Consent to Let

Consent to let is where you obtain permission from your lender to let your home, usually for 6 – 12 months. It’s different from a buy to let mortgage, where the intention to lease a property is made clear at the time of the application. 

You need consent to let your residential property from your lender, but your lender doesn’t have to grant it. 

You will typically require consent to let, rather than changing the mortgage to a buy to let product, if you intend on moving back to the property at some point – i.e. you aren't letting it out indefinitely. This could be because your work demands you spend some time elsewhere for a period, you’re looking after a relative, you’re travelling, you’re nearing the end of your current mortgage product, etc. 

Your lender may not grant consent to let if: 

• The period for which you want to rent out your property is too long 
• The expected monthly rental income isn’t enough 
• They’re not satisfied that your intention to let your property has come about through a genuine change in circumstances – i.e. it appears your intention was always to let your property and that you applied for a residential mortgage to secure a better mortgage deal 
• You have a history of mortgage arrears 

If your lender doesn’t grant consent to let, then your other option would be a buy to let remortgage (changing the residential mortgage to buy to let) – we explain how this works in the next section. 

If consent is granted, they often have no restrictions on who the property is let to, but they’ll likely have requirements regarding the type and length of the tenancy – e.g. an assured shorthold tenancy agreement for typically 6 or 12 months. 

Speak to your current mortgage lender about what you’d like to do and see if consent to let is something they offer. Your lender may charge you an admin fee – typically around £75 - for the consent to let. They may also revise the rate of interest you’re charged for the duration of the tenancy. 

Switch to a Buy to Let

If your lender doesn’t grant consent to let, or it’s not suitable for your situation, you can look into remortgaging your residential mortgage to a buy to let mortgage. 

To change your residential mortgage to a buy to let mortgage you would remortgage onto a completely new product, potentially with a new lender. Note that unlike most residential mortgages – which are typically on a repayment basis – most buy to let mortgages are interest-only. This means the borrower only pays the interest on the loan each month, rather than repaying the capital. This keeps monthly payments lower, helping to maximise rental profits. However, at the end of the mortgage term, the full loan amount still needs to be repaid, typically through selling the property, refinancing, or using other savings. While some lenders offer repayment BTL mortgages, they are less common as they result in higher monthly outgoings, which can reduce overall rental yield. Interest only mortgages remain the preferred choice for many landlords looking to maintain cash flow. 

When assessing affordability for buy to let mortgages (whether interest only or repayment), lenders use a rental income calculation known as an ICR (interest coverage ratio) and LTV (loan to value) to assess how much you could raise on your current property. The vast majority of lenders cap the LTV at 75% and require that the rental income is at least 125% of the monthly interest only mortgage payment at a “stress test” rate of at least 5%.  

You can work out the minimum rental income you would need by using our buy to let rent calculator. The lender will also need to know how much you’re looking to borrow for the property, to ensure that you meet their affordability criteria. 

Find out how much you could borrow with our buy to let mortgage calculator. 

How Much Does It Cost to Change to a Buy to Let Mortgage? 

The cost of switching from a residential mortgage to a buy to let mortgage can vary depending on your lender, the terms of your current mortgage and the new deal you choose. There are several potential costs involved in the process and it’s important to factor these in before making the switch. 

Arrangement Fee 

One of the main costs is the arrangement fee for the new buy to let mortgage. Lenders typically charge a product fee, which can range from a few hundred pounds to several thousand pounds, depending on the mortgage product and the lender’s criteria. Some lenders allow you to add this fee to the mortgage, but this means you’ll pay interest on it over time. 

ERCs 

If you’re remortgaging to a new lender, you may also face ERCs (early repayment charges) from your existing mortgage provider. These charges apply if you remortgage while you’re still within a fixed or discounted rate period. They can be a significant expense, often calculated as a percentage of the outstanding mortgage balance. It’s essential to check the terms of your current mortgage to understand whether ERCs apply and how much they would cost. 

Valuation Fee 

Another cost to consider is the valuation fee. When switching to a buy to let mortgage, the lender will usually require a valuation of the property to assess its rental potential and current market value. Some lenders offer free valuations as part of their mortgage products, while others charge a fee, which can range from £200 - £1,000 depending on the property’s value and location. 

Legal Fees 

Legal fees may apply when remortgaging to a new lender. A solicitor or conveyancer will need to handle the legal aspects of the switch, such as updating the mortgage deed. Some lenders offer free legal services as part of their mortgage deal, while others require you to cover these costs yourself. 

Higher Interest Rates 

It’s important to consider the potential increase in mortgage interest rates when moving to a buy to let product. Buy to let mortgages generally have higher interest rates than residential mortgages, which could result in higher monthly repayments. Additionally, most buy to let mortgages are interest only, meaning that although you will not be repaying the capital during the mortgage term (unless you choose a repayment option), you will need a repayment vehicle in place to repay the loan at the end of the mortgage term. 

How Much Does Consent to Let Cost? 

If you’re applying for consent to let rather than remortgaging, your current lender may charge an administration fee for granting permission. This fee varies between lenders but is typically lower than the costs associated with remortgaging to a buy to let product. However, lenders may also increase your interest rate as part of the agreement, which could make your monthly payments more expensive. 

Can You Switch from Consent to Let to Buy to Let? 

Yes, it is possible to switch from consent to let to a buy to let mortgage, but the process depends on your lender’s policies and your financial situation. Many homeowners initially opt for consent to let as a short term solution, since it allows them to rent out their property without immediately switching to a buy to let mortgage. However, if you plan to let the property for a longer period, moving to a dedicated buy to let mortgage may be more suitable. 

Lenders typically grant consent to let on a temporary basis, often for 6 - 12 months. If you wish to continue renting the property beyond this period, your lender may require you to switch to a buy to let mortgage. Some lenders are more flexible and may allow you to extend the consent to let period, but they often charge a higher interest rate or additional fees. 

If your existing lender offers buy to let mortgages, they may allow you to switch internally without remortgaging to a new provider. This can be beneficial as it may reduce legal costs and speed up the transition. However, you’ll still need to meet their buy to let lending criteria, which typically include rental income requirements, a minimum deposit or equity threshold and an assessment of your overall financial situation. 

Alternatively, if your current lender does not offer a suitable buy to let mortgage or their terms are not competitive, you may choose to remortgage with a different lender. 

A mortgage broker can help assess your circumstances and advise on whether switching to a buy-to-let mortgage is the right decision, as well as find the most suitable deals available. 

Do I Pay Stamp Duty if I Change My Mortgage to Buy to Let? 

In most cases, you do not need to pay Stamp Duty Land Tax simply for changing your mortgage from a residential mortgage to a buy to let mortgage. This is because Stamp Duty is typically only charged when you purchase a property, not when you refinance or change the terms of your existing loan. 

However, there are some circumstances where Stamp Duty may become applicable, including the below.

Purchasing a New Main Residence 

If you’re buying a new property to use as your main residence and retaining your existing property (in this case to remortgage onto buy to let and rent out) then you will pay additional Stamp Duty on the new property as it is technically your second property. The second property surcharge means that landlords and second home buyers must pay an additional 3% on top of standard Stamp Duty rates (until 31/3/2024). This surcharge will increase to 5% on top of standard Stamp Duty rates from 1/4/2025. 

Transferring Ownership or Adding a New Name to the Mortgage 

If you change ownership of the property when switching to a buy-to-let mortgage - such as transferring the home to a partner, spouse, or another party - this could trigger Stamp Duty liability. This is particularly relevant if the transfer results in one party taking on a larger share of the property’s value and the amount exceeds the Stamp Duty threshold. 

Buying Out a Co-Owner 

If you jointly own a property and decide to buy out the other owner while remortgaging to a buy to let mortgage, you may need to pay Stamp Duty on the share you acquire - again, if the value exceeds the relevant threshold. 

Transferring the Property to a Limited Company 

Some landlords transfer their property from personal ownership into a limited company structure for tax efficiency. However, doing this is considered a sale, which means the company would have to pay Stamp Duty at the higher buy to let rate. This applies even if you are the sole owner of both the property and the company. 

What Happens if I Rent Without Consent to Let or Changing My Mortgage to Buy to Let?

If you don't change your mortgage to buy to let or get consent to let but you rent out your property, you'll breach the terms of your mortgage agreement and may face certain consequences.

Can I Let My Home and Buy Another Property? 

Many people take the opportunity to release equity from their property when they change their mortgage to a buy to let one and use the money released as a mortgage deposit for a new home. A residential mortgage is arranged on the new property alongside the buy to let mortgage on your current property. This process is called let to buy. 

Changing Your Mortgage to Buy to Let: Key Points 

1. Inform your lender - contact your current mortgage lender and inform them about your intention to convert your residential property into a buy-to-let investment. They will guide you on their specific process and requirements  
2. Assessment - your lender will likely assess your application based on various factors, including your financial situation, the property's rental potential, and their own lending criteria for buy to let mortgages  
3. Interest rates and fees - be prepared for changes in interest rates and fees. Buy-to let mortgages may have different rates and costs compared to residential mortgages. Your lender will provide details on how this transition may affect your financial obligations  
4. Insurance - you will need to switch from residential insurance to landlord insurance. This type of insurance typically covers rental-related risks, such as property damage caused by tenants  
5. Tax implications - consider the tax implications of renting out your property. Income generated from rent is usually taxable  
6. Regulations - familiarise yourself with local regulations and legal requirements for renting out a property. Compliance with these regulations is crucial to avoid any legal issues  
7. Affordability - ensure that you can afford the mortgage payments on a buy-to-let basis. Lenders may have specific affordability criteria for buy to let mortgages  

It's crucial to work closely with a mortgage broker or lender throughout this process to understand all the implications and make informed decisions. Keep in mind that each lender may have different policies and procedures, so it's important to communicate openly and seek professional advice if needed.