Want to move home but keep your current property as a rental? Let-to-buy could help you rent out your existing home and buy somewhere new.
This can be useful if you want to become a landlord, keep a property as a long-term investment or avoid selling before you move. However, it also means managing two mortgages, rental income, property costs and lender checks at the same time.
Muttuo Mortgages can help you compare let-to-buy options across over 100 lenders, including the mortgage on your current property and the residential mortgage for your next home.
Before choosing let-to-buy
✓ Check whether your current home can work as a rental
The expected rent, property type, condition and location can all affect whether a buy-to-let mortgage is realistic.
✓ Work out how much usable equity you have
Your property value and mortgage balance can affect whether you can release equity or raise a deposit for your next home.
✓ Prepare for two mortgage assessments
You may need a buy-to-let mortgage on your current home and a residential mortgage on the property you plan to buy.
✓ Allow for tax, costs and landlord duties
Keeping your current property may affect stamp duty, tax, insurance, repairs, compliance and long-term running costs.
What is let-to-buy?
Let-to-buy is when you rent out your current home and buy a new property to live in.
In many cases, your existing home is remortgaged onto a buy-to-let mortgage so it can be rented out. At the same time, you apply for a new residential mortgage on the property you want to move into.
This is different from a standard buy-to-let purchase. With let-to-buy, the property you already own becomes the rental property, while your next home becomes your main residence.
Some lenders may allow consent to let in certain circumstances, but this is usually different from a full let-to-buy arrangement. If you plan to rent out your current home long-term, the mortgage route should be checked before you move.
How let-to-buy works
A let-to-buy arrangement usually has two sides.
First, your current home needs to be assessed as a rental property. The lender may look at the expected rent, property value, mortgage balance, loan-to-value and whether the rent is strong enough to support the buy-to-let mortgage.
Second, your new home purchase needs to be assessed as a residential mortgage. The lender will look at your income, outgoings, credit profile, deposit and whether the new mortgage is affordable alongside your wider commitments.
Buy-to-let borrowing is often linked to rental income, and lenders may expect a larger deposit or lower loan-to-value than a standard residential mortgage. The exact calculation varies by lender, property and application.
Check both sides of your move
We can help you review the buy-to-let mortgage on your current home and the residential mortgage for your next one.
Let-to-buy vs buy-to-let
Let-to-buy, buy-to-let and consent to let can sound similar, but they are used in different situations. The key difference is whether you are keeping your current home, buying a separate rental property or getting temporary permission to let.
Route
What it means
Typical situation
Let-to-buy
You rent out your current home and buy a new home to live in.
You want to move but keep your existing property as a rental.
Buy-to-let
You buy a separate property specifically to rent out.
You want to purchase a rental property as an investment.
Consent to let
Your current lender gives permission to rent out your home, usually on a temporary or limited basis.
You need a temporary arrangement and are not fully switching the property onto a buy-to-let mortgage.
Let-to-buy is usually more complex than a standard move because it combines a rental property decision with a new residential purchase. Both sides need to work together before you commit.
What lenders may check
Let-to-buy lenders usually assess both the property you want to rent out and the new home you want to buy.
Existing property being let
New home being purchased
Current property value
Your income and affordability
Existing mortgage balance
Your deposit for the new home
Expected rental income
Your credit history
Loan-to-value on the let property
Existing debts and commitments
Property type and condition
The size of the new residential mortgage
Whether the rent supports the mortgage
Whether both mortgages remain affordable
Some lenders may also consider whether you have landlord experience, especially if the rental property, borrowing or wider case is more complex.
Because two mortgages are involved, lender fit matters. One lender may be comfortable with the rental property but not the residential side, while another may assess the overall case more favourably.
Can you use rental income to help buy your next home?
Potentially, yes, but lenders do not all treat rental income in the same way.
Some lenders may consider the expected rent from your current property when assessing your overall position. Others may take a more cautious view, especially if you are becoming a landlord for the first time or the rental income has not started yet.
The lender will usually want to see that the rent can support the buy-to-let mortgage on your current property. They will also check whether your personal income can support the new residential mortgage, alongside your wider commitments.
This is why it is important to check both sides of the transaction early. The let property and the new home purchase need to work together, not separately.
Can you release equity for your next deposit?
If your current home has increased in value or your mortgage balance has reduced, you may have built up equity.
In some let-to-buy cases, homeowners remortgage the existing property onto a buy-to-let mortgage and release equity to help fund the deposit for the next home. This can make the move possible, but it also increases the borrowing secured against the rental property.
Before using equity, check:
- how much equity may be available after lender checks
- whether the expected rent supports the larger mortgage
- how the new borrowing affects monthly payments
- whether early repayment charges apply
- whether the new residential mortgage remains affordable
- whether there is enough cash left for fees, tax and moving costs
Releasing equity can be useful, but it should be tested carefully. The rental property still needs to work once the larger mortgage, running costs and possible void periods are included.
Thinking about using equity for your next deposit?
Check whether your current property, expected rent and new home purchase could work together.
Stamp Duty, tax and landlord costs
Let-to-buy can affect the cost of buying your next home because you may still own your current property when the new purchase completes.
In England and Northern Ireland, higher rates of Stamp Duty Land Tax may apply if buying your next home means you will own more than one residential property. Scotland and Wales have their own property tax systems, so the cost depends on where the property is located.
You also need to allow for the costs of becoming a landlord.
These may include:
- Property running costs: landlord insurance, repairs, maintenance and periods without tenants
- Letting and management costs: letting agent fees, tenant setup and accountancy support
- Safety and compliance: gas safety, electrical safety, tenancy deposit protection and possible licence requirements
- Tax on rental profit: rental income may create tax considerations, so advice should be taken before you commit
These costs can affect whether let-to-buy works in practice. The rent may cover the mortgage, but the property still needs to work after tax, repairs, insurance, compliance and empty periods are included.
Muttuo can help with the mortgage side, but you should speak to a qualified tax adviser or solicitor about tax, Stamp Duty and legal responsibilities.
What this could look like in practice
A homeowner owns a property worth £300,000 with a mortgage balance of £180,000. They want to buy a new home for £400,000 and rent out their current property.
At first glance, the current property has around £120,000 of equity. However, that does not mean all of it can be released or used as a deposit. The lender will still need to check the property value, rental income, loan-to-value and whether both mortgages remain affordable.
Before moving forward, they would need to review:
Area to review
Why it matters
Expected rent
The rent needs to support the buy-to-let mortgage on the current home.
Equity and loan-to-value
Equity may help with the deposit for the new home, but releasing it increases borrowing.
New residential affordability
The new mortgage still needs to fit their income, outgoings and wider commitments.
Landlord responsibilities
The current home must be suitable, safe and legally ready to rent.
Cash flow
The rental income should be tested against mortgage payments, repairs and void periods.
This shows why let-to-buy needs to be checked as one joined-up plan. The rental mortgage and new home mortgage both need to work together.
Figures are illustrative only. Actual borrowing, repayments, rent, deposit, tax, fees and lender criteria will depend on the property, mortgage, rates and your circumstances.
When let-to-buy may not be the right option
Let-to-buy can be useful, but it is not always the best route. Sometimes selling your current property first may be simpler, cleaner or financially stronger.
It may be worth pausing if:
The rental numbers do not work
The expected rent may be too low to support the buy-to-let mortgage or leave enough margin after costs.
Rental numbers do not work
The expected rent may be too low to support the buy-to-let mortgage or leave enough margin after costs.
Equity is too limited
There may not be enough usable equity to support the next deposit, fees and moving costs.
Affordability feels stretched
Managing two mortgages could leave cash flow too tight, especially once repairs, void periods and running costs are included.
The property is not ready to let
Expensive repairs, condition issues, or compliance work may need to be dealt with before tenants move in.
Costs change the decision
Stamp Duty, tax, insurance, legal costs and landlord responsibilities may make keeping the property less attractive.
Being a landlord does not fit your plans
Let-to-buy means taking on tenant management, maintenance and long-term rental risk.
Sometimes, selling first is the better option. In other cases, let-to-buy can work well, but only when the rent, borrowing, deposit, costs and risks have been properly checked.
How Muttuo Mortgages can help
Let-to-buy involves more moving parts than a standard home move. You need to understand whether your current home can work as a rental property, whether the rent supports the mortgage and whether you can still afford the new home.
Muttuo Mortgages can help you compare let-to-buy options across over 100 lenders, including the buy-to-let mortgage on your current property and the residential mortgage for your next home.
Our team can help you review:
✓ whether your current home could work as a rental
✓ whether the expected rent and loan-to-value support the buy-to-let mortgage
✓ whether releasing equity could help with your next deposit
✓ how the new residential mortgage may be assessed alongside the rental property
✓ what documents, timing and lender checks may be involved
Our team can help you check the full picture before you commit to renting out your current home and buying somewhere new.
Thinking about renting out your current home?
Check whether let-to-buy could help you move while keeping your existing property.
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Frequently asked questions about let-to-buy mortgages
These FAQs cover common questions about renting out your current home, buying somewhere new, lender permission, releasing equity, Stamp Duty and how let-to-buy differs from buy-to-let.
What is a let-to-buy mortgage?
A let-to-buy mortgage is used when you rent out your current home and buy a new home to live in.
Usually, your current property is moved onto a buy-to-let mortgage or a suitable letting arrangement, while your next property is bought with a residential mortgage.
Is let-to-buy the same as buy-to-let?
No. Buy-to-let usually means buying a separate property to rent out.
Let-to-buy means keeping and renting out your current home so you can buy another home to live in. It usually involves both a buy-to-let mortgage on your existing property and a residential mortgage on your new home.
Can I rent out my current home and buy another?
Potentially, yes, if the rent, equity, deposit, affordability and lender criteria support the plan.
You will usually need to check whether your current property can be let, whether the rental income supports the mortgage and whether your new residential mortgage is affordable alongside your wider commitments.
Do I need permission from my current lender to rent out my home?
Yes. You should not rent out your home without speaking to your lender.
Your current residential mortgage may not allow you to let the property without consent. Depending on your situation, you may need consent to let, a product change or a full buy-to-let remortgage.
Can I release equity from my current home for the new deposit?
It may be possible if there is enough equity and the expected rent supports the new mortgage balance.
Releasing equity increases borrowing on the property you plan to rent out, so the payments, rent, loan-to-value and long-term risk need to be reviewed carefully.
Will I pay extra Stamp Duty with a let-to-buy?
You may need to pay higher rates of Stamp Duty or the relevant property tax if you buy a new home while keeping your current property.
The rules depend on where the property is located and your circumstances. You should take tax or legal advice before making a decision.
Can first-time landlords use let-to-buy?
Yes, some lenders may consider first-time landlords using let-to-buy.
However, the criteria vary. Lenders may look carefully at the expected rent, property type, equity, affordability and your wider financial position.
Can Muttuo Mortgages help with let-to-buy?
Yes. Muttuo Mortgages can help you compare mortgage options for both sides of the let-to-buy plan.
This can include the buy-to-let mortgage on your current home and the residential mortgage for your next property.
