Can You Remortgage Your Home to Buy a Rental Property?
If you’ve built up equity in your home, you might be wondering whether you can use it to take your first step into property investment. The answer is yes — you can remortgage your home to buy a rental property, and it’s a route many landlords use to build their portfolios.
At Mortgage Bridge, we help homeowners every week who want to unlock the value in their property to buy a second home or a buy-to-let. Whether you’re completely new to investing or looking to expand, remortgaging can be a smart and flexible way to raise the funds.
Here’s how it works, what lenders look for, and how to make sure you’re making the right move financially.
What Does It Mean to Remortgage to Buy Another Property?
Remortgaging simply means switching your existing mortgage — either to a new deal with your current lender or to a different lender entirely.
When you remortgage to buy another property, you release equity from your home — that’s the difference between your home’s value and your outstanding mortgage balance — and use that money as a deposit for a second property, usually a buy-to-let.
For example:
- Your home is worth £400,000
- You owe £200,000 on your mortgage
- You have £200,000 in equity
You might remortgage up to, say, 75% of your home’s value (£300,000), which gives you £100,000 cash to use towards your new investment.
It’s one of the most common ways for homeowners to get started in property investment without saving a brand-new deposit from scratch.
Can You Really Use a Residential Property to Fund a Buy-to-Let?
Yes — lenders allow it, provided you meet their affordability criteria and the amount you borrow fits within sensible limits.
When you remortgage, the lender will:
- Assess your income and outgoings
- Look at how much equity you’re releasing
- Check that you can comfortably afford your existing mortgage and any new commitments
Once approved, you can use the released equity however you choose — including as the deposit on a rental property.
This is often called “capital raising for property investment”, and it’s a well-established route into buy-to-let.
How Much Equity Do I Need to Remortgage for a Buy-to-Let Deposit?
Generally, you’ll need at least 25% equity remaining in your home after remortgaging.
That’s because most lenders allow you to borrow up to 75–80% of your home’s value (known as the loan-to-value, or LTV).
So, if your property is worth £400,000, the maximum mortgage might be around £300,000 — leaving £100,000 of usable equity.
If you already have significant equity or your mortgage is small, you may be able to release a meaningful amount while keeping monthly payments affordable.
We’ll help you calculate how much equity you could safely release and what that means in terms of buying power for your new investment.
What Type of Mortgage Do You Need on the New Property?
The new property will typically need a buy-to-let mortgage.
Buy-to-let mortgages work differently from standard residential ones — lenders base affordability on the rental income potential of the property rather than your personal salary alone.
They usually require:
- A 25% deposit (which can come from your remortgage)
- A rental coverage ratio of 125–145% of the mortgage interest payments
- A minimum personal income (often around £25,000)
You’ll need to make two separate applications:
- A residential remortgage on your home (to release the equity)
- A buy-to-let mortgage on the rental property (to fund the purchase)
At Mortgage Bridge, we handle both processes together, making sure the timing and lender criteria align smoothly.
What Are the Pros and Cons of Remortgaging to Buy a Rental Property?
Like any financial decision, there are benefits and risks to weigh up.
Pros
✅ Access funds without selling your home
✅ Lower interest rates compared with other borrowing methods
✅ Build a property portfolio faster
✅ Potential to earn ongoing rental income
✅ Benefit from long-term property growth
Cons
❌ Increases your mortgage balance on your home
❌ Higher monthly payments if you borrow more
❌ Risk if the rental property doesn’t perform as expected
❌ Possible early repayment charges on your current deal
We’ll review all these factors with you before making a move — so you can make an informed, confident decision.
How Do Lenders Assess Your Application?
When you remortgage to buy another property, lenders assess two key things:
1. Your Personal Finances
They’ll check your income, debts, and existing commitments to ensure you can handle the new mortgage size.
2. The Purpose of the Equity Release
They’ll want to know where the funds are going — in this case, for a property purchase. Some lenders are cautious about “raising capital for investment,” but many specialist lenders fully support this purpose.
Having a clear plan for your new purchase (such as the property type, expected rental income, or an investment strategy) helps strengthen your case.
We’ll present everything clearly to the lender so your application goes through as smoothly as possible.
Can You Remortgage If You Have an Existing Fixed-Rate Deal?
Yes, but timing matters.
If you’re still within a fixed-rate period, you might face an early repayment charge (ERC) if you switch before the term ends — often 1–5% of your outstanding balance.
Sometimes, though, it’s still worth it if the investment opportunity is strong or if you’re switching to a better deal overall.
We’ll calculate the cost versus benefit before you make any decisions. In some cases, you can even borrow more with your current lender through a “further advance,” avoiding early repayment charges altogether.
What If You Have Bad Credit — Can You Still Remortgage to Buy Another Property?
Yes, it’s possible.
Some mainstream lenders might decline applications with recent credit issues, but there are specialist remortgage lenders who consider applicants with adverse credit — especially if your equity position is strong.
You may need a slightly higher interest rate or lower loan-to-value, but bad credit doesn’t automatically stop you from using equity for a buy-to-let purchase.
We’ll match you with lenders who are comfortable with your circumstances, so you don’t waste time on unsuitable applications.
Should You Buy in Your Personal Name or Through a Limited Company?
If you’re remortgaging to buy a rental property, one key decision is whether to purchase personally or through a limited company (SPV).
Buying in your own name is simpler, with slightly lower interest rates and less admin. However, higher-rate taxpayers often find that buying through a limited company offers better tax efficiency, since mortgage interest is fully deductible as a business expense.
We’ll work with your accountant to explore both routes, ensuring your investment is structured in the most efficient way for your circumstances.
Can You Remortgage a Buy-to-Let to Buy Another One?
Yes — and many landlords do this regularly to grow their portfolios.
You can remortgage an existing rental property to release equity and use it as the deposit for another buy-to-let. This is often called “gearing up” your portfolio.
The principle is the same as remortgaging your home, but lenders will base affordability on rental income across your portfolio rather than your personal salary.
We’ll help you calculate how much you can safely release without over-stretching yourself — maintaining healthy yields and long-term stability.
How Much Can You Borrow When Remortgaging to Buy Another Property?
This depends on:
- Your home’s value and remaining mortgage balance
- The lender’s maximum loan-to-value (LTV)
- Your personal income and credit profile
As a rough guide:
- Most lenders allow borrowing up to 75–80% of your home’s value.
- You’ll usually need to keep at least 20–25% equity in your property.
So if your home is worth £500,000 and your mortgage is £200,000, you could potentially release up to £175,000–£200,000 (depending on lender and affordability checks).
We’ll calculate the figures for you precisely so you know your buying power before you start house-hunting.
Are There Risks to Remortgaging for Property Investment?
Yes, and it’s important to go in with your eyes open.
Remortgaging increases the debt secured against your home. If you face difficulties with your rental property or experience void periods (times with no tenants), it could strain your finances.
That’s why it’s vital to have:
- A realistic rental income forecast
- A financial buffer for emergencies
- Professional advice on structuring your borrowing sensibly
At Mortgage Bridge, we make sure every client understands the risks and rewards clearly before committing to any remortgage deal.
What Are the Alternatives to Remortgaging?
If remortgaging doesn’t feel right, there are a few other ways to raise funds:
- Further Advance: Borrow more from your existing lender without switching your mortgage.
- Second Charge Mortgage: A separate loan secured on your home, leaving your main mortgage unchanged.
- Savings or Investments: If you have other assets, these might be a cheaper way to fund a deposit.
We’ll compare all your options side-by-side so you can choose the route that fits your goals and risk tolerance best.
How Can a Mortgage Broker Help?
Remortgaging to fund a property purchase involves multiple moving parts — two mortgages, two properties, and often two different lenders.
As brokers, we:
- Identify how much equity you can safely release
- Find lenders that allow capital raising for investment
- Coordinate both applications smoothly
- Structure your borrowing to maximise flexibility and minimise cost
Our job is to make the process simple, clear, and completely tailored to your situation.
Final Thoughts: Building Your Future Through Smart Remortgaging
Remortgaging your home to buy a rental property can be a smart way to build long-term wealth — but it’s not something to rush into. Done right, it can open the door to financial freedom and create an extra income stream for the future.
At Mortgage Bridge, we specialise in helping clients unlock equity safely and strategically. Whether you’re buying your first rental or expanding an existing portfolio, we’ll guide you through every step — from calculating your equity to finding the right lender and product.
If you’d like to explore how remortgaging could help you invest in property, we’d love to help.
Let’s talk through your options and see what could work best for you.