What is let-to-buy?

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Let-to-buy is a scenario whereby two mortgages are held at the same time: a residential mortgage and a buy-to-let mortgage. This could be both with the same lender or with two separate lenders. It’s a fairly complex area of lending, and not all mortgage lenders offer them, so it’s a good idea to seek guidance from a mortgage broker with specific knowledge in let-to-buy. 

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While this setup can be very useful for those wanting to buy a new residential property without having sold their original home, it also involves holding two mortgages simultaneously, which can increase financial risk if either property becomes difficult to sell or rent. There are many reasons why people may wish to hold onto their existing property when they buy a new one. Let-to-buy enables them to do so by becoming a landlord, either temporarily or permanently, and renting out their current home.

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Here are some of the circumstances whereby let-to-buy could be a practical solution:

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• To prevent you from losing out on your dream home if you haven’t managed to sell your current property in time to make an offer
• If you want to move in with a partner but neither of you wants to sell your home
• If the property holds sentimental value, perhaps it was where you grew up, or it was gifted from a departed relative, but it doesn't fit your needs to live in
• You want to move away for a set period, perhaps for work, or education, but want to hold onto your home to return to or pass on to children later in life

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Usually, the equity in your existing home is used to put down a deposit on the new residential home, and your rental income earned will cover the remaining payments on the buy-to-let mortgage on your original home.

How can I organise a let-to-buy arrangement?

Due to the complexity of setting up two mortgage deals at the same time, it’s a good idea to have a broker, like ourselves, to support you in organising a let-to-buy mortgage arrangement. 

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It can sometimes be easier to have both the new residential mortgage to purchase your new home and the buy-to-let remortgage for your existing home with the same lender. However, this won’t necessarily mean that you have the same interest rate for both products, as commercial products like buy-to-let mortgages usually have slightly higher rates and fees. 

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Of course, if it’s significantly cheaper or just more viable to have the two mortgages with different lenders, we will advise you accordingly. 

What are the criteria for let-to-buy?

As you are taking out two mortgage deals simultaneously, you'll need to meet the criteria for both products to qualify for let-to-buy. Lenders will need to be sure that one mortgage doesn’t impact your ability to pay the other, so it’s important to be clear on the purpose of both mortgages if taking them with different lenders. 

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Criteria will differ between the two mortgage products, although general criteria such as affordability, age limits, and creditworthiness tend to apply across the board. That said, given the higher risk involved with taking out two mortgages compared to one, the limits imposed on these criteria can be stricter with let-to-buy. 

Buy-to-let remortgage criteria

• The loan is based on the rental income, and lenders will usually be looking for you to make 125-145% of the repayments in rent each month
• Some lenders will also have a minimum personal income requirement; however, this is not always the case, so if you’re retired or don’t work, it may still be possible to find a lender who will base your borrowing on rental income alone
• Most lenders will expect you to have a minimum level of equity in your home before you remortgage onto a buy-to-let for this purpose. This varies by lender, but 25-40% is typical
• If you’re not an experienced landlord, most lenders will want the rental income confirmed by a qualified letting agent, often one registered with a professional body like the Association of Residential Letting Agents (ARLA)
• You’ll usually need to provide proof of your onward purchase (new residential mortgage) as well as proof that you intend to let it out
• You’ll need proof of a repayment plan if you intend to use an interest-only mortgage; however, if you don’t want to sell the property, a capital repayment option is probably wise, unless you have savings or expect an inheritance that could cover the final lump sum of the mortgage

Residential mortgage criteria when you let-to-buy

• You’ll need to prove that you have enough leftover income (after outgoings) to meet the monthly repayments. Keep in mind that lenders will consider your buy-to-let mortgage repayments an expense, so you may need to show proof that your rental income will cover this
• If you’ve used the equity from your existing home towards the buy-to-let remortgage, you’ll need to provide another deposit, like when you bought your first home. In most cases, you’ll need a deposit of at least 10-15%, as 5% deposits are rare for second homes or let-to-buy scenarios
• Age limits can be a bit more restrictive for let-to-buy, so it may be difficult to get a mortgage deal that ends later than your 75th birthday

Let-to-buy FAQs

How is let-to-buy different from buy-to-let?

A buy-to-let mortgage is a type of mortgage used to buy investment property, and you’ll need one as part of a let-to-buy arrangement. Let-to-buy is not a mortgage product; it’s the name for the specific scenario whereby you have both a residential mortgage and a buy-to-let mortgage for a specific purpose.

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Let-to-buy was designed for people who didn’t intend to become landlords, but would rather do so than sell their original home. 

Will I have to pay stamp duty if I let-to-buy?

Yes, you’ll actually have to pay the additional rate of stamp duty when you let-to-buy, as your new residential home is classed as a second home. However, if you only become a landlord as a temporary measure and do intend to sell your first property eventually, it may be possible to claim this back from HMRC. This will only apply if you sell either of the properties within 3 years, and go back to owning just one property.

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Last updated: 28/04/2025

‍[Disclaimer] This content is intended for general guidance and is not a substitute for personalised mortgage advice.

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