Let to Buy Mortgage UK 2026: How to Buy a New Home and Keep Your Existing One

What Is a Let to Buy Mortgage?

A let to buy mortgage is an arrangement where a homeowner converts their existing residential mortgage to a buy-to-let mortgage so they can rent out their current property, while simultaneously taking out a new residential mortgage to buy a new home. A let to buy mortgage strategy allows the homeowner to keep their existing property as an investment rather than selling it.

The let to buy mortgage route is used by homeowners who want to retain their current property as a long-term investment, cannot or do not want to sell in the current market, or want to use the equity in their existing property to fund the deposit on the new purchase.

A let to buy mortgage transaction involves two simultaneous mortgage events: the conversion of the existing residential mortgage to a buy-to-let mortgage, and the application for a new residential mortgage on the property being purchased. Both must be managed simultaneously and ideally with the same or coordinated lenders to avoid complications.

How a Let to Buy Mortgage Works Step by Step

In a let to buy mortgage transaction, the homeowner first approaches their existing mortgage lender (or a new lender) to convert the current residential mortgage to a buy-to-let mortgage. This is a consent to let arrangement or a formal remortgage to a buy-to-let product. The lender assesses whether the rental income from the existing property covers the buy-to-let mortgage payment at the required coverage ratio.

Simultaneously, the homeowner applies for a new residential mortgage on the property they intend to move into. The new residential mortgage lender assesses income and affordability in the usual way, but must factor in the buy-to-let mortgage payment as a committed expenditure.

The equity released from the existing property - through a remortgage to a higher LTV buy-to-let product or from the difference between the existing mortgage balance and the property value - is used as the deposit on the new residential purchase. Sufficient equity in the existing property is therefore essential for a let to buy mortgage strategy.

Let to Buy Mortgage: Stamp Duty Considerations

A let to buy mortgage transaction triggers the 3 percent SDLT surcharge on the new residential purchase in most cases. Because the buyer will own two properties at completion, the additional property SDLT surcharge applies unless the old property is sold simultaneously - which defeats the purpose of a let to buy mortgage.

The SDLT surcharge on a let to buy mortgage purchase is calculated on the full purchase price of the new home. For a 400,000 pound new purchase, the 3 percent surcharge adds 12,000 pounds to the stamp duty liability compared with a standard first or only home purchase.

Borrowers pursuing a let to buy mortgage strategy should factor the SDLT surcharge into their financial modelling. The additional stamp duty cost must be funded from savings rather than from the mortgage, as lenders do not include SDLT in the loan calculation.

Let to Buy Mortgage Affordability

Affordability for a let to buy mortgage transaction is assessed on two levels. The buy-to-let mortgage on the existing property is assessed using the rental income coverage ratio - typically 125 to 145 percent of the monthly interest payment at the lender's stress rate.

The new residential mortgage is assessed using the borrower's income, but with the buy-to-let mortgage payment included as a committed monthly outgoing. This dual mortgage exposure means the residential mortgage available under a let to buy mortgage arrangement is typically lower than it would be if the existing property were sold.

Some lenders specialize in let to buy mortgage transactions and have specific products designed for simultaneous buy-to-let conversion and new residential purchase. A whole-of-market mortgage broker experienced in let to buy mortgage transactions can identify the most suitable lenders and coordinate the two applications.

Tax Implications of a Let to Buy Mortgage

A let to buy mortgage transforms the existing home from a main residence into a rental property. This has several tax implications. Capital gains tax will apply when the property is eventually sold, as it will no longer qualify for principal private residence relief for the period it has been let.

Private residence relief applies for the period the property was the main home, plus potentially a further 9-month exemption. After this, any gain attributable to the letting period is taxable. Keeping records of purchase price, improvement costs, and the date letting commenced is important for calculating future CGT on the let to buy mortgage property.

Rental income from the let to buy mortgage property is subject to income tax. Mortgage interest relief is capped at the basic rate for residential let properties held personally, regardless of the landlord's tax rate. Landlords with let to buy mortgage properties should review whether a limited company structure would be more tax-efficient.

Is a Let to Buy Mortgage Right for You?

A let to buy mortgage strategy works well for homeowners who have significant equity in their current property, whose current property would achieve strong rental income, who have sufficient personal income to support two mortgage payments in an affordability assessment, and who are prepared to manage a rental property or pay a letting agent.

Let to buy mortgage transactions are more complex than a straightforward purchase or remortgage. The simultaneous management of two mortgage applications, a property transaction, and a tenancy setup requires careful coordination. Delays in any element can affect the timing of the other.

A let to buy mortgage is less appropriate for homeowners with limited equity in the existing property, where the rental income would not cover the buy-to-let mortgage payment, or where the SDLT surcharge would materially affect affordability of the new purchase.

Frequently Asked Questions

Last reviewed June 2026 · Kael Tripton Editorial