Understanding Let to Buy Mortgages

Navigating the property market can be challenging, especially when you’re looking to move but haven’t yet sold your existing home. A Let to Buy mortgage offers a solution, allowing you to rent out your current property and purchase a new one.

What is Let to Buy?

Let to Buy involves converting your existing home mortgage into a Let to Buy mortgage, enabling you to rent out your current property while taking out a new residential mortgage to buy another home that you intend to live in.

This strategy allows you to generate rental income from your old property and possibly benefit from property value appreciation over time, now owning two properties.

Key Features of Let to Buy:

Two Mortgages: You’ll have both a Let to Buy mortgage for your existing property which will be let, and a new residential mortgage for your new home.
Equity Release: You can release equity from your current property to help with the deposit on your new home subject to lender criteria and the estimated rent amount.
Investment Opportunity: Retaining your original property provides an investment opportunity through rental income and potential property value increases. This may serve as your pension in later life.

How Does Let to Buy Differ from Buy to Let?

While both Let to Buy and Buy to Let involve renting out a property, they serve different purposes. Buy to Let mortgages are for purchasing a property specifically to rent out, while Let to Buy is used when you want to move into a new home and let out your current one, turning the old home into an investment property.

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Benefits of Let to Buy

Eases Moving Process

Let to Buy mortgages can simplify the moving process by eliminating the pressure of selling your current home before buying a new one as you are not relying on a buyer. This can be particularly advantageous if you’re relocating for work or have found your dream home but haven’t yet secured a buyer for your existing property.

Retain Property Investment

By converting to a Let to Buy mortgage, you retain your property as an investment, potentially benefiting from rental income and long-term property value appreciation. This can be a way of providing a pension for when you retire.

Flexibility for Couples

Let to Buy can be a great solution for couples moving in together, allowing them to keep one property as an investment while moving into the other in case the move does not end up being permanent.

Potential for Equity Release

This mortgage type allows you to release equity from your existing property, which can be used towards the deposit on your new home. This is subject to the rent passing the lender’s stress test and other lender criteria being met.

Drawbacks of Let to Buy

Managing Two Mortgages

Owning two properties means managing two mortgages, which can be financially and logistically demanding, and you are relying on tenants to pay you.

Higher Interest Rates

Let to Buy mortgage rates tend to be higher than standard residential mortgage rates due to the increased risk for lenders. This can change though so best to take professional advice.

Stamp Duty

Purchasing a second property means paying higher stamp duty rates, although this can be reclaimed if you sell your original property within a certain period, three years at the time of writing. Ask a solicitor to confirm this to ensure you would be eligible for a refund. Find out your Stamp duty costs with our Buy to Let Stamp Duty Calculator.

Landlord Responsibilities

Becoming a landlord comes with responsibilities, including property maintenance and managing tenant relationships. There may also be periods when the property is vacant, which can affect your rental income. Understanding tenant demand in the area is crucial so speak with lettings agents locally.

Lending Criteria for Let to Buy Mortgages

Typical Requirements:

Minimum Age: Usually 21-25 years.
Maximum Age: Generally up to 80 years.
Equity: You typically need a substantial amount of equity in your current property, e.g. above 25% loan to value.
Rental Income: Expected rental income must usually cover at least 125-145% of the mortgage interest payments on their future rate or current rate if it’s a 5 year fixed product. This can be higher for higher rate taxpayers.
Good Credit Rating: A solid credit history can help you depending on the lender.
Affordability Assessment: Lenders will conduct a thorough affordability assessment which is often linked to the rent that the let to buy property will generate. Some lenders look at wider affordability too. Find out your buy to let affordability with our Buy to Let Calculators.

Steps to Secure a Let to Buy Mortgage

Assess Your Financial Situation

Evaluate your current financial position, including the equity in your home and your ability to manage two mortgages.

Research the Market

Investigate potential rental income for your property. Speaking to local letting agents can provide insights into realistic rental values and demand. Understand your obligations as a landlord.

Seek Professional Advice

Consulting with a mortgage broker or advisor is crucial. At Kerr & Watson, our experts can guide you through the complexities of Let to Buy mortgages, ensuring you make informed decisions. Source a tax advisor that can inform you of your obligations in that department.

Is Let to Buy Right for You?

Let to Buy can be a practical solution for those needing to move before selling their current home, or for couples wanting to retain one property as an investment. However, it’s not suitable for everyone. Consider your financial stability, willingness to manage rental properties, and the implications of having two mortgages along with any other obligations.

Conclusion

Let to Buy mortgages offer a viable option for individuals looking to move without selling their current home immediately. By understanding the benefits and drawbacks, and seeking expert advice from professionals like Kerr & Watson, you can navigate this process smoothly and make the best decision for your financial future.

Contact Kerr & Watson

For tailored advice on Let to Buy mortgages and to explore your options, contact Kerr & Watson. Our experienced team is here to help you every step of the way, ensuring you make the best choices for your property investments. you.

Written by Daniel Watson, CeMAP, DipMAP
Published: 17 April 2024 | Last updated: 2 August 2025

The information on this page is not tailored to any individual readers and should not be considered financial advice under any circumstances.

If you are seeking advice about a mortgage, you should speak with a qualified advisor.

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Frequently Asked Questions

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Is it better to use a mortgage broker or go directly to a bank?

Using a mortgage broker gives you access to multiple lenders rather than just one bank’s products. An independent, whole-of-market mortgage broker can compare options across high street and specialist lenders, helping you apply for the most suitable mortgage first time.

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What does a mortgage broker do?

A mortgage broker assesses your income, outgoings, credit history and deposit to recommend the most suitable mortgage for your circumstances. They compare lenders across the market, submit your application, liaise with underwriters and work alongside your conveyancer until your purchase or remortgage completes.

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Can a mortgage broker access better deals?

An independent mortgage broker can compare products across a wide range of lenders, including some intermediary-only deals. While rates are set by lenders, a broker helps ensure you apply for the most suitable and competitive option available.

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What does whole-of-market mean?

Whole-of-market means a mortgage broker can access products from a broad range of lenders rather than being restricted to one bank or a limited panel. This gives you more flexibility and potentially better-suited mortgage options.

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Mortgage adviser fees vary depending on the complexity of your case. Some advisers charge a flat fee, while others are paid via lender commission. At Kerr & Watson, our fees are explained clearly upfront so you understand exactly what you’re paying and why.

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How much can I borrow for a mortgage?

Most lenders offer between 4 and 4.5 times your annual income, subject to affordability checks. The exact amount depends on your income, monthly commitments, credit history and deposit size. A mortgage broker can provide a personalised estimate based on your full financial situation.

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How quickly can I get an Agreement in Principle?

An Agreement in Principle can often be arranged within 24 hours once your key financial details have been reviewed. This provides an indication of how much you may be able to borrow and can strengthen your position when making an offer on a property.

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How long does it take to get a mortgage offer?

A mortgage offer is typically issued within two to six weeks after submitting a full application. Timescales vary depending on the lender, valuation process and complexity of your case. Providing accurate documents from the outset can help speed up the process.

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What documents do I need to apply for a mortgage?

Most lenders require proof of identity, proof of address, recent payslips or tax calculations, bank statements and details of your deposit. Self-employed applicants may also need accounts or SA302s. Your mortgage adviser will confirm exactly what is required before applying.

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Do I need a deposit to get a mortgage?

Yes, most mortgages require a minimum deposit of 5% of the property value. A larger deposit can improve the range of lenders available to you and may secure a more competitive interest rate.

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Can I get a mortgage if I’m self-employed?

Yes, many lenders offer mortgages to self-employed applicants. You will usually need at least one to two years of accounts or tax returns. A specialist mortgage broker can help match you with lenders who understand variable or complex income structures.

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Can I get a mortgage with bad credit?

It may still be possible to get a mortgage with adverse credit, depending on the severity and how recent the issues were. Specialist lenders consider applicants who may have been declined elsewhere. An independent mortgage broker can review your options carefully before applying.

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