If you’re looking to rent out your current home while releasing equity and getting another mortgage for a residential property elsewhere, let-to-buy could be the solution you need. Here, we explain how let-to-buy mortgages work, how lenders assess applications, the eligibility criteria, and where to find the best rates in the UK.
What is let-to-buy?
A let-to-buy mortgage agreement involves converting your existing residential property onto a buy-to-let mortgage while simultaneously taking out a new residential mortgage on another home you plan to move into. Instead of selling your current property, you keep it as a rental investment.
It’s different from a standard buy-to-let purchase because you already own the property that’s going to be let out, and you’re applying for two linked mortgages at the same time - one residential and one buy-to-let.
How does it work?
Let-to-buy works by releasing equity from your current home through remortgaging or refinancing, and switching onto a buy-to-let mortgage, then using the released equity as a deposit toward your new residential property purchase. Lenders assess the two mortgages separately.
The buy-to-let mortgage is usually assessed based on projected rental income and stress test calculations, while the new residential mortgage is assessed based on your personal affordability. Both applications must be approved for the let-to-buy arrangement to move forward.
Because two mortgages are involved, the timing, lender criteria, buy-to-let investment, and affordability calculations must align, and all fall into place.
Eligibility criteria
Let-to-buy mortgage eligibility criteria vary by lender, but key areas typically assessed include:
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Property equity: Most lenders require at least 20% to 25% equity in your current home after refinancing onto a buy-to-let mortgage. However, you also need to consider whether you’ll be using any of your home equity towards the new residential property as a deposit.
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Rental income and stress testing: The expected rental income for the home you’re converting to a BTL must meet lender rental coverage requirements, commonly 125% to 145% of the mortgage payment at a stressed interest rate.
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Personal affordability: Lenders assess your income, existing debt commitments, and spending to ensure you can afford the new residential mortgage.
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Deposit: Equity released from your current property is often used as a deposit, but you must still meet residential loan-to-value (LTV) requirements.
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Credit history: A strong credit profile can improve your options for lenders and provide access to better rates. However, if you have bad credit, there are still specialist bad credit lenders that may be worth approaching.
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Property type and location: Both the existing property (being let) and the new residential property must fall within specific lender criteria around property types (for example, non-standard constructions will greatly reduce your choice of lenders).
Because lenders use different stress tests and affordability models, speaking with a broker first can significantly improve your chances of approval for a let-to-buy mortgage.
How to get a let-to-buy mortgage
Getting a let-to-buy mortgage usually starts with reviewing your current property value and outstanding mortgage balance, then getting some realistic rental projections. From there, you can assess how much equity may be available for your new home deposit.
Since two mortgage applications must be coordinated, the lender you use is critical. A skilled broker can structure both applications correctly, ensure that rental calculations meet stress-testing requirements, and align your completion dates to avoid delays.
If you’d like to explore your let-to-buy mortgage options and compare available lenders, speaking with a specialist broker is the most straightforward approach. If you’d like a free initial chat with an expert advisor, you can get started below:
Get bespoke let-to-buy mortgage advice
Let-to-buy mortgage calculators
Because you’ll need two different types of mortgages if you proceed with a let-to-buy arrangement, it’s worth taking the time to calculate figures for each portion.
So, for the new buy-to-let mortgage on your existing property, you can use our BTL calculator below by simply entering your estimated home value, the amount of equity you’ll be leaving there as your deposit, and the expected rental income, followed by the interest and tax rate:
Then, for the residential mortgage with the new home you’re moving to, you can use our repayment calculator to get an idea of what your new monthly payments will be based on the size of the mortgage, the term length, and the potential interest rate.
Using both calculators together gives a clearer picture of affordability across your full let-to-buy arrangement.
Are the rates higher for let-to-buy?
Let-to-buy mortgage rates are not necessarily higher without additional underlying reasons. Still, you will usually be taking out a buy-to-let mortgage (which may have slightly higher rates than residential mortgages) alongside a new residential mortgage.
Your rates will depend on the LTV ratio for both properties, your credit profile, the lender you approach, and whether you qualify for mainstream or specialist products. Strong levels of equity (effectively meaning higher deposits and lower LTVs) coupled with solid rental coverage typically result in the best let-to-buy rates.
Available UK mortgage lenders
Here are some examples of mainstream UK lenders with the ability to provide both BTL and residential mortgages that may be open to let-to-buy mortgage applications:
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Virgin Money: For the residential portion, standard Virgin Money residential criteria and LTV limits apply. One major benefit with a Virgin let-to-buy mortgage is that you don’t need simultaneous completion if both mortgages are being taken out with them.
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The Mortgage Works: The maximum LTV offered by The Mortgage Works for let-to-buy is 80%. You must be using the same solicitor for both your new purchase and the remortgage onto the BTL product, and you must have lived in your original residential home for at least 6 months.
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Barclays: May be open to let-to-buy applications but will typically apply strict criteria to both the BTL and residential portions. For example, you may need to use a larger deposit with Barclays than specialist lenders require, and you may also need to pass tighter affordability checks.
If you want to carry out a realistic comparison of lenders using accurate calculations and current rates, the easiest way to see all your options is with guidance from an experienced mortgage broker.
Why use Money Helpdesk for your let-to-buy mortgage?
Let-to-buy mortgages are more complex than a standard house purchase because the two linked applications for two different types of mortgage must be approved simultaneously, and lender criteria rarely align perfectly.
Here’s why homeowners across the UK use Money Helpdesk to find the best mortgage:
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Access to advisors with experience in buy-to-let and residential mortgages
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Support coordinating both sides of a let-to-buy application
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Free initial chat with no obligation to proceed further
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Access to specialist lenders with exclusive deals and flexible criteria
If you’d like to compare current let-to-buy mortgage rates or discuss whether this strategy suits your specific situation, you can get started here.
FAQs
Let-to-buy can be worthwhile if you want to keep your existing property as a long-term investment while moving home (and you can afford to do this).
However, it significantly increases your overall financial commitments and exposure to property market risk, so your affordability and long-term plans should be carefully assessed.