Converting a Mortgage to Buy To Let

Before exploring what’s involved when you convert a mortgage to buy to let, we first need to pin down what a buy to let mortgage is. 

If you compare buy to let mortgages with regular mortgages, you’ll find both are designed to help you buy or finance property. But whereas a regular mortgage is secured against the value of your home while you live there, buy to let mortgages are for landlords who want to rent out their property. 

Buy to let remortgages and mortgages, then, are specialist loans. And you would typically only apply for one when you don’t plan to live in a mortgaged property yourself.

Converting a Residential Mortgage to Buy to Let

Why would a property owner with a residential mortgage consider changing to a buy to let mortgage? Converting a mortgage to buy to let is usually the result of a move by the property owner – and the subsequent letting out of their property. 

In most cases, it means the property owner/mortgagor is either:

• Switching their main residence to buy-to-let and moving to a rented property, or
• Switching their main residence to buy-to-let and buying a new property

If you were the property owner in the first example, you’d need to approach your lender about converting your residential mortgage to a buy to let mortgage. In the second scenario, you’d need to inquire about both switching to a buy to let mortgage AND obtaining a new regular mortgage. 

Buy to Let Mortgage Requirements

If you intend to both keep and rent your residence when you move, you should start by searching out the best buy to let mortgages. Winning your lender’s consent to then convert your conventional mortgage, however, will be based on a number of buy to let criteria, including:

• The type of property you own, and who’ll be renting it from you,
• The type of mortgage you hold on the property (its terms and conditions),
• Whether you’ll be renting or buying when you move out, and
• The number of other properties you may own

If your lender declines to switch your mortgage, you may be able to perform a buy to let mortgage comparison, and remortgage with an entirely new buy to let mortgage broker. Either way, you’ll likely be required to show proof of the rental amount you’re expecting to generate. 

You should also be prepared for your buy to let mortgage rates to increase somewhat compared with your current mortgage. So, in terms of affordability, it’s advisable to aim for a rental income that’s 125-140% of your expected mortgage payments. 

Taking advantage of an interest-only buy to let mortgage can be a great way to earn extra income. Just be aware that, unless you plan to let your property to an approved relative (spouse, partner, child, grandparent, parent, or sibling), even the cheapest buy to let mortgage won’t be regulated by the Financial Conduct Authority (FCA).