What let-to-buy means
Let-to-buy is when you keep your current home and rent it out, then buy a new home to live in. It usually involves two mortgages: a buy-to-let mortgage on the home you're letting, often raised to release a deposit, and a residential mortgage on your new home.
Your current lender must agree before you let your home. They may give 'consent to let', or you may need to remortgage it onto a buy-to-let mortgage.
Worked example
Borrowing £225,000 against a £300,000 property at 5.5% over 25 years costs £1,031.25 a month interest-only, or £1,381.70 a month on a repayment basis.
Use the calculator once for each mortgage, the one on the home you're letting and the one on your new home, to see your total monthly commitment.
Things to check
Lenders check that the rent on the let property covers its mortgage interest by a margin, and that you can afford the mortgage on your new home from your income.
Your new home may count as an additional property, so the higher rates of stamp duty can apply. You'll also need landlord insurance and to meet your obligations as a landlord.
What this calculator assumes
The calculator treats the mortgage you enter as a single loan on one nominal rate for the whole term, repaid in equal monthly payments, with interest worked out monthly at one twelfth of the annual rate. Run it once for the buy-to-let on your current home and once for the residential mortgage on your new one.
It leaves out consent-to-let fees, the stress test on the rent, stamp duty on the new purchase and landlord costs, so treat the result as a guide for comparing options rather than an offer.
Inputs for the let-to-buy mortgage calculator
Property price
The value of the property this mortgage is for.
Deposit
Your deposit or the equity you're leaving in the property.
Interest rate (per year)
The annual interest rate on your mortgage. The rate shown is only an example, so enter the rate from your quote. Interest is worked out monthly at one twelfth of the annual rate. Lenders may calculate interest differently (some charge it daily), so your actual payments can differ slightly.
Term
How many years the mortgage runs for.
Repayment type
Buy-to-let mortgages are often interest-only. Repayment clears the loan over the term.
CALCULATOR QUESTIONS
Let-to-buy mortgage calculator questions
How does a let-to-buy mortgage work?
You remortgage your current home onto a buy-to-let mortgage, often releasing equity for a deposit, and take out a residential mortgage on the new home you'll live in.
Do I need my lender's permission to rent out my home?
Yes. Ask for consent to let or remortgage to a buy-to-let mortgage. Letting without permission can breach your mortgage terms.
Will I pay extra stamp duty?
Possibly. If you'll own two homes, the higher rates for additional properties can apply to the new purchase.
Can I see the cost of both mortgages?
Run the calculator once for each mortgage and add the monthly payments together.
Which numbers go in for the home I am letting?
Use the value of the home you are letting as the property price and the equity you are leaving in it as the deposit, so the amount borrowed matches the buy-to-let loan.