What Is a Buy-to-Let Mortgage?

A buy-to-let mortgage is a mortgage that is for people who intend on buying a property for the purpose of renting it out to others as tenants - and not to live in it themselves, therefore using the property as an investment.

The amount you borrow for a buy-to-let mortgage usually depends on the rental income you expect to earn from tenants.

There are similar buy-to-let mortgage rules as there are for standard residential mortgages, although there are some differences to be aware of.

Is it Illegal to Live in My Buy-to-Let Property?

Although it is not against the law to move into your property that you have from a buy-to-let mortgage, It will breach your buy-to-let mortgage agreement with your lender. It is important to not break the terms and conditions as the property is intended for tenants only and not yourself.

If you wish to live in your buy-to-let property, you will need to switch to a standard residential mortgage for the property. This is because buy-to-let mortgages are designed so your monthly rental income covers the mortgage payments.

If you live in your buy-to-let property, your rental income will cease to exist or reduce. This will be a cause of concern to your lender.

If you are caught living in your buy-to-let mortgage property, you could end up on the Rogue Landlord Database. This is a database that was bought together in 2018. It helps authorities identify landlords who have been found breaking the rules and committing illegal activity - which helps to protect tenants too.

Can I Change My Buy-to-Let Mortgage to Residential?

If you wish to change your buy-to-let mortgage to a residential mortgage deal for you or a family member to live in it, then you have options. Typically, most lenders will allow you to remortgage to a new deal 6 months after you sign a loan deal.

This is the standard process as you cannot release equity from any mortgage until usually 6 months after you sign the deeds.

If you need to remortgage to release funds then you may be able to potentially remortgage up to 85-90% LTV if switching from a buy-to-let to a residential mortgage.

Unfortunately, not all mortgage lenders will allow a remortgage from a buy-to-let mortgage to a residential one. This is dependent on your lender, so it is something that you will have to investigate with your buy-to-let mortgage provider.

If circumstances mean that you move into the property before remortgaging you will need to inform your current lender. If you don’t you may breach your contract and in some cases could demand a full and final repayment which would be financially crippling and disastrous.

The benefit of changing from a buy-to-let mortgage to a residential mortgage usually attracts a lower interest rate. You could save money by informing your lender as soon as possible.

Things to Consider

Not all buy-to-let mortgage lenders allow you to remortgage onto a residential product as they may not offer residential mortgages, so bear this in mind.

When switching, some lenders may want to see address history and know whereabouts you were living while the property was on buy-to-let.

In cases where you might have been working overseas and are now moving back to the UK and want to change your buy-to-let to a residential mortgage then some lenders will require you to have some bank accounts in this country still open to keep your credit history going and so they can perform the necessary checks.

LTC Mortgages

Contact our team of expert mortgage brokers at LTC Mortgages today for help and advice if you are wishing to move into your buy-to-let property. With over 15 years of experience in the industry, we work closely with a range of lenders from across Merseyside and know just how to bring you the best deals.