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A Let to Buy mortgage is a structured financing approach designed for homeowners who wish to retain their current property while purchasing a new residence. It typically involves converting the existing home into a rental property while securing a new residential mortgage for the onward purchase. In regulatory and lending contexts, clarity around obligations, affordability, and risk exposure remains essential https://smartcitymortgages.co.uk/blog/let-to-buy-mortgage-guide-how-it-works-criteria-costs-and-risks-2026/ . What is a Let to Buy mortgage? It is a dual-mortgage arrangement where one loan is secured against the current property—now intended for rental—and another is taken for a new home. This structure differs from standard residential lending due to the introduction of projected rental income and landlord responsibilities. How does a Let to Buy mortgage work? The borrower refinances the original property onto a buy-to-let basis, often releasing equity to fund a deposit for the new purchase. Simultaneously, a residential mortgage is arranged for the new home. Lenders typically assess both transactions in parallel, ensuring that the rental income is likely to cover the mortgage on the let property while confirming affordability for the new loan. Who is Let to Buy suitable for? This option is generally considered by individuals relocating for work, upsizing, or choosing not to sell in a subdued market. It may also appeal to those seeking to build a rental portfolio gradually without immediately disposing of their primary asset. Let to Buy vs Buy to Let: what’s the difference? While both involve renting out property, the distinction lies in borrower intent and ownership history. Let to Buy applies to an existing residence being converted into a rental, whereas Buy to Let is used to acquire a property specifically for investment purposes from the outset. The underwriting process may reflect these differing risk profiles. What are the lending criteria for Let to Buy mortgages typically include a review of credit history, income stability, and overall debt exposure. Lenders may require evidence that the applicant can sustain payments on the new residential mortgage without relying solely on rental income. Stress testing at higher interest rates is commonly applied. How much equity or deposit do you need? In most cases, a minimum equity level of around 20–25% in the existing property is expected, although this can vary. For the onward purchase, deposits are often aligned with standard residential requirements, but the availability of released equity can influence the final structure.