Changing your mortgage to Buy to Let
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Changing your mortgage to Buy to Let
Jess Pearson talks to us about changing your residential mortgage to a Buy to Let mortgage.
Can I switch my residential mortgage to a Buy to Let?
There is the option to change your residential mortgage into a Buy to Let mortgage depending on your circumstances and the lender’s criteria. There are a couple of potential options when looking to change your mortgage from a residential to Buy to Let.
The first is Consent to Let – this is something you can apply for with your residential lender, asking them for permission to rent your property out, usually temporarily. The second is remortgaging from a residential mortgage onto a Buy to Let mortgage.
How much equity do you need to switch to a Buy to Let mortgage?
Buy to Let mortgage lenders usually require a minimum of 20% to 25% equity in the property. However, the amount of mortgage borrowing you can raise depends on the rental income likely to be achieved.
What’s the process when changing from a regular mortgage to a Buy to Let?
The remortgage process when changing from a residential mortgage to a Buy to Let mortgage is similar to a standard remortgage. Some additional information and documents are required – including details of how much property would rent for, usually evidenced by a letter from ARLA – the Association of Residential Letting Agents.
You may also need to confirm your onward plans in terms of your living arrangements. That justifies why you’re changing from a residential into a Buy to Let and where you’re going to live moving forwards.
What criteria do I need to meet to change my mortgage to a Buy to Let?
Lenders have specific criteria when it comes to Buy to Let mortgages, and these vary from lender to lender. They all have quirks that they’re able to accept. The criteria typically include credit history, affordability, equity in your property, landlord experience and what your future plans are.
What happens if you rent your property and don’t change your mortgage to a Buy to Let?
If you rent out your property without seeking Consent to Let from your existing lender, you could be in breach of your mortgage contract.
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What is Consent to Let?
Consent to Let is an agreement between a mortgage lender and the mortgage holder/homeowner, that allows you to rent out your property while remaining on a residential mortgage. It is usually a short term solution, and in the long term you would need to consider remortgaging your property onto a Buy to Let mortgage.
How much deposit do you need for a Buy to Let?
The deposit required is heavily affected by what the property is going to rent for on a monthly basis. How much you can borrow on a Buy to Let mortgage is based on the rental income. If the rental income allows you to put the usual minimum deposit down, it can be as little as 20% to 25%. But you could need more for certain properties.
How much can I borrow with the Buy to Let mortgage?
The amount you can borrow on a Buy to Let mortgage mainly depends on the rental income expected, but other considerations would be the property value and the amount of deposit.
Do I have to pay stamp duty if I change my mortgage to a Buy to Let?
When remortgaging a property you already own, typically there would be no stamp duty payable. If you were to purchase a Buy to Let property there would be a stamp duty liability.
We aren’t tax advisors, so for specific tax advice, including stamp duty, you will need to speak with your solicitor or tax advisor.
How soon can you remortgage to a Buy to Let?
If you have recently purchased your property, most lenders will want you to have waited a minimum of six months until you’re able to remortgage. However, some lenders will do this from day one.
How can a broker help with changing your mortgage?
In considering the right option for you in changing your residential to a Buy to Let mortgage, get in touch with a mortgage broker. We will be able to talk you through the potential options and advise you on the right approach based on your needs and circumstances.
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER DEBT SECURED ON IT.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE SOME FORMS OF BUY TO LETS.
THERE MAY BE A FEE FOR MORTGAGE ADVICE. THE PRECISE AMOUNT OF THE FEE WILL DEPEND UPON YOUR CIRCUMSTANCES, BUT WILL RANGE FROM £99 TO £549 AND THIS WILL BE DISCUSSED AND AGREED WITH YOU AT THE EARLIEST OPPORTUNITY.
ASSET HARBOUR MORTGAGE AND PROTECTION LIMITED TRADING AS ASSET HARBOUR MORTGAGE AND PROTECTION ARE AN APPOINTED REPRESENTATIVE OF HLP PARTNERSHIP LIMITED, WHICH IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.
