Let-to-buy mortgages
You want to keep your current home and let it out, then buy a new one to live in. Two mortgages, one transaction, careful timing. We handle both ends.
Let-to-buy is the route you take when you want to keep your existing residential home and let it out, while buying a new property to live in. You remortgage the old home onto a buy-to-let product, release some equity for the new deposit, and then take a residential mortgage on the new home. Two transactions, often two lenders, often the same week. The complexity is in the timing and the affordability, not in the concept. Done well, you build a rental portfolio without selling the home you are emotionally attached to.
Who this is for
- You are moving home and want to keep the existing one as a rental.
- You bought a starter home and want to upsize without losing the original property.
- You inherited a property and want to use it to fund the deposit on a new home.
- You are relocating for work and the old home would let well.
What let-to-buy actually involves
Three moving parts. First, your existing home is remortgaged from a residential mortgage onto a buy-to-let product. Second, equity is released from that property to fund the deposit on the new home. Third, a new residential mortgage is taken on the new home, typically with a different lender. The first two often complete on the same day, the third can be the same day or shortly after. Timing matters because lenders set conditions on completion sequence.
Lender consent and the existing residential
You cannot simply let your residential property out without consent. Most residential lenders allow short-term "consent to let" arrangements (usually 6 to 12 months) but these are not a permanent solution. Switching to a proper buy-to-let mortgage at the point you move is the right answer for almost everyone keeping the property long-term.
Affordability across two mortgages
The new residential lender will assess your income against the new mortgage payment and ignore most rental income from the let-to-buy property (because the property is not yet established as a let). The buy-to-let lender will assess the rental cover on the existing property under the standard ICR (Interest Cover Ratio) test. The two stress tests are independent. We coordinate them so both pass.
Worked example, £280,000 existing home, £500,000 new purchase
Existing home worth £280,000 with a £160,000 residential mortgage. Remortgage to a 75% LTV buy-to-let product at £210,000. That releases £50,000 of equity for the deposit on the new home. Expected rent on the existing home £1,200 a month (£14,400 a year). At 5.5% stress rate, annual stressed interest on the buy-to-let is £11,550. ICR at 145% requires rent of £16,748; case is tight. Drop the buy-to-let to 65% LTV (£182,000), and the ICR clears at 130% required level. The new residential mortgage on the £500,000 home: deposit £50,000 from let-to-buy plus £50,000 own savings (10% combined), residential mortgage £400,000. Affordability assessed against full earned income with the buy-to-let payment factored as a commitment. We model both legs together.
Stamp duty on the new home
The new home is technically a "second property" until you have sold the old one, which means SDLT (Stamp Duty Land Tax) applies including the 5% additional-property surcharge. If you sell the old home within 36 months, you can usually claim the surcharge back. In a let-to-buy you do not sell the old one, so the surcharge is permanent. Budget for it from day one. On a £500,000 new home, the standard SDLT is £12,500 plus the surcharge of £25,000, total £37,500.
Why the choice matters: let-to-buy versus sell and buy
Sell and buy: smaller mortgage on new home, no SDLT surcharge, no rental hassle, no exposure to a second property. Let-to-buy: keep an appreciating asset, build a portfolio, but absorb £25,000 of additional SDLT on the new home and take on landlord obligations. The maths varies by area; in a strong rental market with rising values, let-to-buy often pays back the SDLT surcharge in 4 to 6 years of net rental profit plus capital growth. In a flat market it can take 10 plus years. We model the realistic five-year and ten-year picture.
Common pitfalls we see
Telling the existing residential lender nothing and starting to let; this breaches the mortgage. Underestimating the SDLT surcharge in the budget for the new home. Picking a buy-to-let lender that requires the rent to clear standard ICR at 145% rather than the let-to-buy adjusted figure. Forgetting that personal income is fully assessed on the new residential mortgage and the existing buy-to-let payment counts as a commitment. We sequence all four.
Buy-to-let warning
Most buy-to-let mortgages, including the let-to-buy product on your old home, are not regulated by the Financial Conduct Authority. The new residential mortgage on your new home remains regulated. The case has both regulated and non-regulated elements, take advice on the regulatory framing.
How Major Money Matters helps
Specific things we do for this case type. No generic platitudes.
Coordinate both mortgages
Two lenders, two solicitors, one completion date. We hold the timeline so neither side stalls the other.
Stress the rent properly
We use a realistic rental valuation from a local letting agent so the buy-to-let ICR holds at offer stage.
Plan the SDLT bill
The 5% additional-property surcharge applies. We give you the all-in figure on day one so the deposit on the new home is right.
Build for the next step
If this is the first of several rentals, we structure the financing so adding a third or fourth property is straightforward.
Frequently asked questions
Why not just remortgage to release equity and keep the residential?
Because once you stop living in the property, it is no longer a residential mortgage. Most residential lenders require you to occupy the property as your main home. Letting it out without switching to a buy-to-let mortgage breaches your mortgage terms.
How much deposit do I need on the new home?
Typically 10% minimum on a residential mortgage, often higher because the new lender wants to see headroom given the existing buy-to-let commitment. The let-to-buy equity release usually funds it.
Will the new lender count the rental income from the old property?
Some will, most will not. Lenders treat newly let properties as unproven income. Once the property has been let for 12 months and is on a buy-to-let mortgage with rent on bank statements, several lenders will count it on the next remortgage. The first move usually relies on your earned income alone.
Do I have to sell the old property within 36 months?
No, in let-to-buy you intend to keep it. The 36-month sale rule applies if you wanted to reclaim the SDLT additional-property surcharge by selling the old home as a former main residence. In let-to-buy, the surcharge is permanent.
Can my existing residential lender keep the old mortgage as a buy-to-let?
A few will offer a "switch to buy-to-let" product. Most do not, you remortgage to a different lender for the buy-to-let product. We compare both routes.
How long does a let-to-buy take?
Allow 8 to 12 weeks from instruction to completion. The buy-to-let remortgage and the new residential purchase are typically completed on the same day or within a few days of each other.
Related
Closest siblings to this scenario. Worth a read.
First-time landlord mortgages
First buy-to-let purchase. Different lender pool, different paperwork. We pick the lender that fits.
Read moreBuy-to-let remortgages
Buy-to-let rate ending soon. Six-month window. Different stress tests to residential. We line it up.
Read moreLimited company buy-to-let
Hold the property inside an SPV. Section 24 stops biting, mortgage interest goes back to being a real expense.
Read moreWhat our clients say
Real reviews from clients across Romford and Essex, verified on Google.
Rated 5.0 out of 5 from 92 Google reviews Read the reviews on Google
Keep the old, buy the new
A quick 15-minute call tells you whether the affordability stacks across both mortgages, the all-in cost including stamp duty, and the realistic completion timeline.
Named adviser, wherever possible. No call centre. We aim to return your call as quickly as we can. Mon to Fri 9am to 5pm, weekend appointments on request.