Let to Buy mortgage guide in 2026 refers to a financing approach that allows a homeowner to purchase a new property to live in while simultaneously renting out their existing home. It is typically used when someone wants to move but does not want to sell their current residence immediately, instead converting it into a rental asset. What is a Let to Buy mortgage https://smartcitymortgages.co.uk/blog/let-to-buy-mortgage-guide-how-it-works-criteria-costs-and-risks-2026/ ? It is a structure where the existing residential mortgage is switched to a consent-to-let or a new buy-to-let mortgage, while a new residential mortgage is taken on the next property. This creates a dual-property arrangement, often subject to lender approval and affordability checks. How does a Let to Buy mortgage work? In practice, the lender assesses whether the current property can realistically be rented out and whether the expected rental income can support the mortgage obligations. At the same time, the borrower must qualify for a new residential mortgage based on their income, credit profile, and existing commitments. The process usually involves coordination between two mortgage applications. Who is Let to Buy suitable for? It is generally suitable for homeowners who need to relocate for work, family, or lifestyle reasons but prefer not to sell in a potentially unfavourable market. It can also appeal to those considering becoming accidental landlords or gradually entering property investment without fully committing to a buy-to-let portfolio. Let to Buy vs Buy to Let: what’s the difference? The main distinction is intent and sequence. Let to Buy involves converting an existing home into a rental property while buying a new main residence. Buy to Let is typically a purchase made specifically as an investment property from the outset, without the borrower previously living in it. What are the lending criteria for Let to Buy mortgages can vary between providers, but generally include stable income, a good credit history, and sufficient equity in the existing property. Lenders will also review existing debt commitments and stress-test affordability under higher interest rate scenarios. How much equity or deposit do you need? Most lenders expect a significant level of equity in the current property, often around 25% or more, although this can vary. For the new home, a standard residential deposit is still required, typically starting from 5% to 15% depending on the lender’s risk assessment. How do lenders assess rental income? Rental income is usually evaluated using a “coverage ratio” approach, where expected rent must exceed mortgage payments by a set margin, often 125% to 145%. Independent rental valuations are commonly required to verify expected income levels. What are the disadvantages and risks of Let to Buy? These include increased financial exposure due to holding two properties, potential void periods where the rental property is unoccupied, tax implications on rental income, and the risk of falling property values. Borrowers may also face stricter affordability checks and higher interest rates compared to standard residential products. Additionally, changes in regulations or market conditions in 2026 may impact long-term viability and returns.