What is Let to Buy and how does it work?


Let to Buy is when you keep your current home and rent it to tenants, and buy a new home to live in. The mortgage on your existing property will be switched to a Buy to Let mortgage, allowing you to take a residential mortgage on your new property.

Let to Buy can be an option for those who want to purchase a new home whilst keeping hold of their existing property and letting it out. As someone looking to buy a new property, it can allow you to release some equity from your current home and put it down as a deposit on your new one.

It’s a popular choice for couples who move in together, perhaps once they both already have their own properties. In this case, you’d both move into one of the properties and rent the other one out on a Let to Buy mortgage.

You might also choose Let to Buy when you’ve got your sights on a new property but are struggling to sell your current home in time. If you have enough equity, then it’s possible to switch to a Let to Buy mortgage and release funds to use for your deposit on the new home.

Being a landlord won’t be right for everyone, so you’ll need to weigh up all the pros and cons before you go ahead. You’ll have lots of responsibilities, including ensuring the property is properly maintained, and covering void periods when you don’t have tenants. You’ll also have to declare any income you receive from renting your property.

What are the advantages of Let to Buy?

The main benefit of Let to Buy is that you don’t have to sell your existing home to buy a new one.

This can be a big advantage if you’re struggling to sell your current property but need to move to a new house, or if you love your property and one day would like to move back there.

Letting to Buy means you’ll own two properties, so will benefit if house prices rise in future. You’ll also receive an income from the rent on the property you let out.

What are the disadvantages of Let to Buy?

Owning two properties is a big responsibility, and you’ll need to able to cover the costs of maintaining both homes.

You’ll also have two mortgages and must be prepared for the fact that you may experience ‘void periods’ when you don’t have any tenants living in the property you’re renting out.

Another potential disadvantage is that Let to Buy mortgage rates are not as competitive as residential mortgage rates because of the increased risk for lenders. You’ll also have to pay steeper Stamp Duty charges when you buy your next property, as there are additional costs for those buying a second home.


How much stamp duty do you pay on Let to Buy?

The amount of Stamp Duty you must pay will depend on the value of the home you’re purchasing. There are five different rate bands for Stamp Duty, so your bill will be calculated on the part of the property purchase price falling within each band.

You’ll also have to pay an extra 3% on top of these standard Stamp Duty rates as you’re buying a second home.

Current rules state that if you sell the original property within 3 years you can claim back the difference between what you paid and the standard rates for moving home.

You can check how much you might need to pay using our ‘Stamp Duty calculator’.

⁠What’s the difference between Let to Buy and Buy to Let mortgages?


Buy to Let mortgages are for borrowers buying a property specifically to let out, or to remortgage a property they already let out.

Let to Buy mortgages are used when you want to buy a new property to live in, but choose to keep your existing property and rent it out. You will need to remortgage the existing property to a Let to Buy mortgage deal, and if the property is still being rented out when that deal comes to an end, it will then be treated as a standard Buy to Let remortgage.

What is the lending criteria for Let to Buy?

Like all mortgage types, whether you’re choosing a Let to Buy mortgage for the first time, or refinancing with one, there’s a strict set of criteria you’ll need to meet in order to be approved.

Many lenders differ, but here’s a standard list of what they may demand:
● Minimum age: 25 (for most lenders)
● Maximum age: 75
● A large deposit (or equity), usually around 20-25%
● Monthly rental income of at least 145% of the mortgage interest
● Good credit rating
● To pass the individual lender’s affordability assessment
● Have net disposable and allowable income


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