Can I change my mortgage to a buy-to-let to release equity?

Answered on 25 January 2017 by Nick Morrey

Can I change my mortgage to buy to let and release the equity so I can buy another house?

Releasing equity by transferring to a buy-to-let

Without knowing your exact financial circumstances and values involved, I can't say whether what you are looking to do is feasible or not. Certainly in principle, what you are looking to do, which is a "let to buy" is prefectly doable, however, as with many things the devil is in the detail.

How would I be assessed by lenders?

Typically most lenders use a combination of overall indebtedness, rental income calculation and loan to value (LTV) to assess how much you could raise on the current property. Most lenders cap the the LTV at 75% and this means that the rental income would need to meet the lenders rental calculations (normally 125% of the monthly payment at a notional rate of 5%). You can work out the minimum rental income you would need by using our BTL rent calculator. The lender would also need to know how much you would need to know how much you are looking to borrow for the new property, to ensure that you met their criteria for affordability.

If you'd like to talk about your enquiry in more detail, then you can contact one of our consultants on 0344 346 3672 and they'll be able to give you a clearer idea of how we can help you make the move you're looking for.

Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.

We recommend you seek professional advice with regard to any of these topics where appropriate.


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