Let to Buy Mortgage Advice
Let to buy allows you to rent out your current home and use the equity released to fund the deposit on a new one — owning both properties simultaneously. It is the practical solution for homeowners who want to move but either cannot sell, or choose not to sell, their existing property. The existing property is converted to a buy-to-let mortgage; the new property is purchased on a standard residential mortgage. Both applications typically happen simultaneously.
How Let to Buy Works
Scenario: you own a 380,000 home in Fleet with 180,000 remaining on the mortgage. You want to buy a 480,000 property in Guildford but do not want to sell. The let to buy process: remortgage the Fleet property to a buy-to-let mortgage at 75% LTV (285,000), releasing 105,000 in capital after repaying the existing 180,000 mortgage. Use the 105,000 as the deposit on the Guildford purchase. Take a new residential mortgage on the Guildford property of 375,000. Result: two properties owned, one let out in Fleet, one occupied in Guildford.
The critical constraint is rental income coverage on the existing property. The new buy-to-let mortgage must be covered by the rental income at 125% to 145% of the payment at a stressed rate. For the Fleet example: 285,000 mortgage at 5% interest only is 1,187 per month. Required rent at 125% coverage: approximately 1,484 per month. Fleet 3-bed semis produce rents of 1,500 to 1,800 per month — sufficient. We confirm the rental coverage calculation before any let to buy process begins.
| Let to Buy Example | Fleet Property | Guildford Purchase |
|---|---|---|
| Property value | £380,000 | £480,000 |
| Mortgage | £285,000 (BTL, 75% LTV) | £375,000 (residential) |
| Capital released / deposit | £105,000 released | £105,000 deposit (21.9%) |
| Monthly payment (interest only BTL) | £1,187 | £1,900 (repayment) |
| Rental income required (125% cover) | £1,484 minimum | N/A |
| Fleet rental market achievable | £1,500–£1,800 | N/A |
Tax Implications of Let to Buy
Letting your former main residence creates tax considerations that should be understood before proceeding. Capital gains tax: when you eventually sell the let property, CGT is potentially payable on the gain during the let period (private residence relief covers the period you lived there). Income tax: rental income from the let property is taxable. Mortgage interest tax relief: for higher-rate taxpayers, only 20% tax relief is available on mortgage interest in personal name; limited company ownership provides full deduction but requires the let to buy remortgage to be in the company. We advise on the tax position before recommending ownership structure.
Let to Buy in Hampshire and Surrey
The Hampshire to Surrey upsizing journey — from Fleet, Farnborough or Aldershot to Guildford, Woking or Winchester — is one of the most common let to buy scenarios in our market. Rising equity in Hampshire properties alongside higher Surrey prices makes the simultaneous let-and-buy the practical route for homeowners who have outgrown their Hampshire home but want to retain it as a long-term asset. We manage the entire process: BTL remortgage on the existing property, residential mortgage on the new purchase, coordinated timelines and simultaneous applications.
The Let to Buy Process
Step 1: assess the current property’s rental income potential and confirm the BTL remortgage is viable. Step 2: calculate the capital released and confirm it is sufficient for the target purchase deposit. Step 3: apply simultaneously for the BTL remortgage and the new residential mortgage. Step 4: coordinate completion timelines to ensure the BTL remortgage completes before the residential purchase requires the deposit funds. We manage all four steps, with no broker fee on either application.
We handle the BTL remortgage on your existing property and the residential mortgage on your new purchase simultaneously, at no broker fee on either. Call 01252 111 000 →