Remortgaging to a Buy-to-Let Mortgage: A 2025 Guide + Free Checklist
Remortgaging to a buy-to-let mortgage is a practical way to turn your property into a rental income source, unlock equity for future investments, or meet lender requirements for letting. This guide, up to date for 2025, breaks down the process, from understanding lender criteria to preparing your application, so you can make confident, informed decisions.
Table of Contents
What Is a Buy-to-Let Mortgage?
A buy-to-let (BTL) mortgage is a loan designed for properties intended to generate rental income. Some of the qualities of a BTL mortgage are:
- Allows you to rent out your property for additional income.
- Higher deposits (typically 25–40%).
- Interest-only options, which reduce monthly repayments.
- Rental income criteria, with lenders requiring income to exceed mortgage payments by 125–145%.
- Higher interest rates than residential mortgages due to added risks, like potential rental voids.
When a Buy-to-Let Mortgage Is Not Enough
If Airbnb or short-term letting is your primary goal, a standard buy-to-let mortgage often won’t suffice. A holiday let mortgage or specialist lender is usually the better choice. Always consult with your lender or mortgage broker to ensure compliance and avoid penalties.
Can You Remortgage to Buy-to-Let?
Yes, landlords can remortgage their property to secure a buy-to-let mortgage. There are two key scenarios:
- Switching from Residential to Buy-to-Let: If you want to rent out your home, you can remortgage it as a buy-to-let property or apply for “consent to let.”
- Refinancing an Existing Buy-to-Let: Landlords can switch to new deals to save money or release equity.
“Many landlords don’t realise that switching from a residential mortgage to buy-to-let can offer more flexibility in structuring your investment portfolio. The key is to plan for lender requirements early.”
Reasons to Remortgage to a Buy-to-Let
Switching your property from a residential mortgage to a buy-to-let (BTL) mortgage can be a strategic move for those looking to generate rental income or repurpose their property as an investment. Here are the main reasons to remortgage to a buy-to-let mortgage:
1. Generate Rental Income
Renting out your property allows you to earn consistent income, which can:
- Cover your mortgage payments.
- Provide additional cash flow for personal or business expenses.
2. Moving to a New Home
If you’re relocating but don’t want to sell your current home, remortgaging to a BTL mortgage enables you to let it out legally while securing your new property.
3. Release Equity for Investment
Remortgaging to a BTL product can unlock equity to:
- Fund the deposit on a new residential home.
- Invest in additional buy-to-let properties, growing your portfolio.
4. Comply with Lender Rules
Renting out a property with a residential mortgage without permission violates mortgage terms. Remortgaging to a BTL ensures compliance and avoids potential penalties or breaches.
5. Repurpose an Inherited or Vacant Property
If you’ve inherited or own a property you don’t plan to live in, converting it to a buy-to-let allows you to monetise the asset.
6. Take Advantage of Tax Benefits
Rental income is taxable, but buy-to-let mortgages may offer tax-deductible benefits, such as:
- Deducting mortgage interest via the 20% tax credit.
- Claiming certain allowable expenses related to letting.
7. Prepare for Retirement
Converting your property into a rental income stream can provide long-term financial stability during retirement.
9. Switch to a Long-Term Investment Strategy
A buy-to-let mortgage facilitates turning your property into a long-term investment, leveraging rental yields and potential capital appreciation.
10. Legal Letting Without Limitations
While a “Consent to Let” agreement allows temporary letting under a residential mortgage, it’s often time-limited and incurs additional fees. Remortgaging to a BTL provides a more permanent and flexible solution.
How to Remortgage to a Buy-to-Let
Switching your property from a residential mortgage to a buy-to-let (BTL) mortgage involves a structured process to ensure compliance with lender requirements and maximise your financial benefits. Here’s how you can remortgage to a buy-to-let:
Steps to Remortgage to a Buy-to-Let
1. Understand Lender Requirements
Lenders have specific criteria for BTL mortgages:
- Rental Income: Must typically cover 125–145% of monthly mortgage payments at a “stress-tested” interest rate (usually 5.5% or higher).
- Equity: Most lenders require at least 25% equity in the property.
- Tenancy Type: The property must be rented out under an Assured Shorthold Tenancy (AST) or equivalent.
- Credit History: A good credit score and financial track record are crucial.
2. Assess the Costs
Understand the costs involved in remortgaging:
- Early Repayment Charges (ERCs): Check if your current residential mortgage has penalties for early termination.
- Remortgaging Fees: Expect costs for:
- Valuations
- Arrangement fees
- Legal services
- Higher Interest Rates: Buy-to-let mortgages typically have higher interest rates than residential mortgages.
3. Engage a Mortgage Broker
A broker can help you:
- Compare buy-to-let mortgage deals across lenders.
- Understand specific criteria, such as how your expected rental income will be evaluated.
- Manage the paperwork and streamline the process.
4. Prepare Documentation
To remortgage to a buy-to-let, you’ll need to provide key documents that verify your financial situation, property details, and compliance with rental regulations. Here’s a breakdown of what’s typically required:
- Proof of Income:
- Payslips for the last 3–6 months (if employed).
- Tax returns (SA302s) and HMRC tax year overviews for the last 2–3 years (if self-employed).
- Proof of Rental Income (if applicable):
- Tenancy agreements and bank statements showing rental payments.
- A rental valuation or appraisal, if the property isn’t currently let.
- Existing Mortgage Details:
- A recent mortgage statement outlining your outstanding balance and monthly payments.
- Consent to Let (if temporarily renting under a residential mortgage).
- Energy Performance Certificate (EPC):
- The property must have a minimum EPC rating of E to qualify for rental purposes. In 2030 this will rise to a rating of C.
- Affordability Evidence:
- Rental income projections that meet lender criteria (typically covering 125–145% of mortgage payments at a stress-tested rate).
- Evidence of additional income sources, such as savings or dividends, if needed.
- Landlord Compliance Documents:
- Proof of landlord insurance or a plan to switch from residential cover.
- Gas and Electrical Safety Certificates to ensure the property meets legal standards.
- Credit and Debt Information:
- Details of outstanding debts, such as loans or credit cards.
- Be prepared for the lender to conduct a credit check.
5. Submit Your Application
Apply for a buy-to-let remortgage with your chosen lender. During this process, the lender will:
- Conduct a credit check.
- Arrange a valuation of your property to confirm its market value and rental potential.
6. Complete the Valuation and Legal Process
- The lender’s valuation ensures the property meets their requirements.
- Engage a solicitor to handle the legal work, including transferring your mortgage from residential to buy-to-let.
7. Transition to Landlord Responsibilities
Once your BTL mortgage is approved:
- Update Insurance: Inform your insurer and switch to landlord insurance.
- Legal Compliance: Ensure the property meets legal letting requirements, such as gas and electrical safety certificates.
- Prepare Tenancy Agreement: Draft an Assured Shorthold Tenancy (AST) or equivalent contract.
Top tip!
Consent to Let vs. Remortgaging: If you plan to rent out your property temporarily, ask your current lender for consent to let, which is faster and avoids the need for a new mortgage. However, this is usually time-limited (e.g., 12 months).
Equity and Affordability Explained
How Much Equity Do You Need?
- Most lenders require at least 25% equity in the property. For example:
- Property Value: £300,000
- Outstanding Mortgage: £225,000
- Equity: £75,000 (25%)
Affordability Testing
Lenders assess rental income against mortgage payments using an Interest Coverage Ratio (ICR), which ensures the rental income exceeds the mortgage payments by a set percentage (typically 125–145%), accounting for potential costs like maintenance, void periods, or rising interest rates.
Example: If your monthly repayment is £1,000, lenders may require rental income of £1,250–£1,450.
Choosing the Right Buy-to-Let Mortgage
Key Factors to Consider:
- Fixed vs. Variable Rates: Fixed rates offer stability, while variable rates may save costs if interest rates drop.
- Loan-to-Value (LTV): Lower LTVs often lead to better rates.
- Interest-Only vs. Repayment: Interest-only keeps costs lower, but repayment builds equity faster.
- Flexibility: Some lenders offer options like overpayments or payment holidays.
“Choosing the right product isn’t just about the lowest rate—it’s about flexibility and long-term returns. A good broker can help you balance these priorities.”
The Best Timing for a Remortgage
When weighing up when to remortgage to a buy-to-let, think about:
- When your current mortgage deal ends to avoid higher Standard Variable Rates (SVR
- When you’ve built at least 25% equity
- When property values or rental demand are strong.
Acting during favourable market conditions or before regulatory changes, like EPC updates, can also secure better rates. If you’re moving or need to release equity for investments, plan ahead to meet lender criteria and ensure the property meets rental standards. Starting the process 3–6 months in advance is ideal for a smooth transition.
Seasonal Trends
- Spring and Summer: High rental demand in UK cities like Newcastle and Manchester makes these ideal times for new investments. If they’re popular university cities too, you could see a pulse in summer and autumn as students arrange accommodation for the upcoming year.
- Market Monitoring: Interest rates tend to fluctuate; keeping an eye on market predictions is crucial.
Newcastle and North East-Specific Insights
At Mansons Property Consultants, we’ve been experts in the North East property market for over 20 years! And we can assure you, it offers excellent opportunities for buy-to-let investments:
- High Rental Yields: Areas like Jesmond and Heaton deliver competitive returns.
- Growing Demand: Newcastle’s student and professional populations drive steady rental demand.
- Selective Licensing: Some Newcastle wards require landlords to register properties with the council—check if this applies to you.
“It’s essential to match your property type to tenant demand. For example, in Newcastle, students often prefer shared housing in Jesmond, while families favour larger homes in Gosforth.”
Remortgaging to a Buy-to-Let: Free Checklist
Remortgaging to a buy-to-let can unlock the potential of your property, whether you’re generating rental income, investing for the long term, or releasing equity for future projects.
Our printable checklist helps simplify the whole process so you can take it one step at a time.
Landlord support made simple
Once you’ve secured your buy-to-let mortgage, your adventure as a landlord begins! Get started here with our simple landlord checklist.
If you’d like support with renting out your property, our team of expert letting agents in Newcastle and the North East would love to help.
From Let Only services to Fully-Managed support, you can choose an offering that meets your needs.
