Let to Buy mortgages: how they work, pros, cons & eligibility

A let-to-buy mortgage allows you to move homes without selling your current property. You refinance your current home as a rental property, then take out a new residential mortgage on the home you plan moving to. Below is a practical, jargon-free breakdown of how let-to-buy mortgages work, who they suit, and what lenders look for.

1. What is a Let to Buy mortgage?

What is a let-to-buy mortgage? It’s not typically a standalone product—it’s a setup where you end up with two mortgages at the same time:

• Current home: rental property (mortgage becomes a buy-to-let)
• New home: residence (standard residential mortgage).

In other words, “let to buy” describes the transition: you rent out your old home so you can buy a new one.

2. How does Let to Buy work?

Let’s take a step-by-step look at how let-to-buy mortgages work:

1. Remortgage your current home on a buy-to-let basis. The lender will assess whether the property is suitable for renting and whether the expected future rental income will support the mortgage.
2. Release equity (if available). If you have enough equity, you may be able to borrow more against your current home and use that money as part (or all) of your deposit and associated costs on your next property.
3. Apply for a residential mortgage on the new home. This is assessed using your income and affordability, but lenders will also consider the let-to-buy arranging on your current property. 
4. Move into your new home and rent out your old property. You become a landlord with legal and practical obligations. You’ll need to plan for void periods, repairs, and compliance.

3. Who is a Let to Buy mortgage suitable for?

A let-to-buy mortgage is most useful when you’re moving homes, and don’t wish to sell your current property. Common scenarios include:

• Couples moving in together (each owns a place; one becomes the rental).
• Property chain delays (you’ve found a new home, but you can’t sell your current home in time).
• Relocation for work (you want to keep your current propertybut rent it out instead).
• Sentimental reasons (you don’t want to sell your home yet).

The key question is not “Can I rent it?” but “Can I safely manage two mortgages if something goes wrong?” (for example, the tenant leaves or stops paying their rent, repairs are needed, or rates rise).

4. Let to Buy vs Buy to Let: what’s the difference?

People often confuse the two because they both involve renting out property

This distinction matters because lenders may ask for evidence of an onward purchase and will treat your case as “moving home + landlord risk,” rather than just “landlord.”

5. Lending criteria for Let-to-Buy mortgages

Let-to-Buy Mortgage Criteria (Existing Property)
Typical Lender Checks Include:

• Maximum loan-to-value (LTV) ratio, often around 75% (meaning ~25% equity).
• Rental “stress test” or interest cover ratio (ICR).Many lenders require that rent covers 125% to 145% of the mortgage interest at a stressed rate (the exact threshold depends on your income tax band and lender policy).
• Minimum and maximum age limits (varies by lender; often a maximum age in the 80s).
• Landlord readiness: insurance, property condition, and letting viability.

Residential mortgage criteria (new home)

• Standard income & affordability checks.
• Credit history/score.
• Proof you’re genuinely buying a home to live in and planning to rent out your old home.
• The lender may account for the overall risk of carrying two mortgages, even if rental income is strong.

6. How much can I borrow with a Let to Buy mortgage?

There are two borrowing calculations happening:

• For the existing home (BTL), borrowing is largely driven by expected rent and the lender’s stress test/ICR. 
• For the new home (the residential side), borrowing is driven by your income and affordability.

Although your equity can act as a deposit, it’s not “free money.” You’re increasing your leverage on a property that now carries landlord risks, such as voids, repairs, and compliance costs.

7. Let to Buy mortgage rates

Let-to-buy mortgage rates are something people search for, expecting one neat number, but pricing is usually split.

BTL rates are often higher than residential rates because lenders take on extra risk, such as tenant dependence and rental market volatility. Rates and fees depend heavily on loan-to-value (LTV) ratio, rental assessment, and whether the rate is fixed or variable.

Many lenders distribute complex cases via brokers, so you’ll often find the best fit through an adviser, though it won’t necessarily be the “lowest headline rate” you’ve seen which isn’t always as cheap as it may seem once you take into account things such as lender, valuation and legal fees.

8. Advantages and Disadvantages of Let to Buy

Advantages of Let to Buy mortgages:

• Move home without selling first.
• Potential to keep long-term exposure to property value growth (two properties).
• Rental income might provide you with a secondary income. Useful for breaking a chain or avoiding rushed selling.

Disadvantages of Let-to-Buy mortgages:

• Responsible for two mortgages.
• Void periods and unexpected repairs can impact cash flow.
• BTL products often have higher rates and fees.
• Landlord obligations: safety checks, management, tenant issues.
• Tax and an additional stamp duty surcharge can significantly impact the numbers.

9. Stamp Duty and tax considerations for Let to Buy

Stamp Duty surcharge on second homes

If you own your current home when you complete the purchase of a new one, you may be subject to higher SDLT rates for additional dwellings in England or Northern Ireland. As of April 1, 2025, the higher rates start at 5% on the portion up to £125,000 and increase by band. There is also a refund option if you sell your previous primary residence within three years, subject to certain conditions. 

Scotland and Wales have different systems—check the relevant local rules.

Tax implications of renting out your home

Rental income is taxable, and one of the major pitfalls is mortgage interest relief. For individual landlords of residential property, finance cost relief is limited to a reduction in basic-rate taxes (currently 20%), rather than being fully deductible from rental income. 

This can cause the actual costs of higher-rate taxpayers to be significantly higher than a simple “rent minus mortgage” calculation suggests.

When you come to sell the property in the future, you might be required to pay capital gains tax if its value has increased over the period that the property usage changed to a buy to let.

N.B. We are not authorised to provide any tax advice and recommend you talk to a tax adviser for qualified advice on the potential tax implications of becoming a landlord and owning a buy to let property.

10. What are the alternatives to Let to Buy?

If the let-to-buy option seems too risky or doesn’t meet the lender’s criteria, the following are common alternatives:

• Consent to let: keep your current residential mortgage but get permission from your existing lender to rent out the property temporarily (often time limited and may change your rate/fees). 
• Sell and rent short-term: break the chain and buy later when timing works.
• Bridging finance: can help with timing gaps, but it’s specialist, fee-heavy, and not for casual use (treat as last-resort and get advice).

Frequently asked questions about Let to Buy mortgages

Is let-to-buy a good idea?

It can be, if you have solid equity, a realistic rent price, and enough of a financial cushion for vacancies and repairs. However, it’s a bad idea if the plan only works in a “perfect tenant, no surprises” world.

Do I pay stamp duty on let to buy?

Yes, often. Buying a new home while still owning the old one can trigger higher stamp duty land tax (SDLT) rates in England and Northern Ireland. You may be eligible for a refund if you sell your previous main home within three years, but conditions apply.

Can first-time landlords use let to buy?

Yes, but lender appetite varies. Expect stricter scrutiny of rental viability, financial buffers, and proof of the onward purchase.