Can You Remortgage Your Home to Buy a Rental Property? Clear Guide & Real Options

Can You Remortgage Your Home to Buy a Rental Property? Clear Guide & Real Options

Many homeowners consider using the equity in their current property to buy a rental property, either to generate extra income, diversify investments or begin building a property portfolio. But is it possible to do this through a remortgage — and how do lenders assess it?

This guide explains the process, what lenders look for, and the options available if you want to remortgage your home to buy a rental property. This article provides general information only and does not offer regulated mortgage advice.

Can You Remortgage Your Home to Buy a Rental Property?

Yes. Many people release equity from their residential home to help fund:

  • A buy-to-let deposit
  • Legal costs
  • Renovation costs
  • Stamp duty
  • Additional purchasing costs

This is known as capital raising, and many lenders allow it as long as the funds are used legitimately and the homeowner meets affordability requirements.

How Remortgaging to Buy a Rental Property Works

The process typically involves several steps:

1. Assess the equity in your home

You can usually borrow up to 75–85% LTV on a residential remortgage, depending on:

  • Credit strength
  • Income
  • Property type
  • Lender criteria

Example:
Home value: £400,000
Existing mortgage: £180,000
Max LTV (75%): £300,000
Potential equity release: £120,000

2. Confirm your affordability for the increased borrowing

Residential remortgage affordability is based on your:

  • Income
  • Outgoings
  • Credit profile
  • Financial stability
  • Stress testing

Lenders ensure you can safely afford the new residential mortgage amount even before assessing the rental property.

3. Use the released equity as your buy-to-let deposit

Buy-to-let deposits typically require:

  • 25% deposit for most lenders
  • 20% deposit with a smaller group of lenders
  • 35%+ for HMOs, new builds or more complex cases

Your raised funds become your buy-to-let deposit when you apply separately for the investment mortgage.

4. Apply for the buy-to-let mortgage

The buy-to-let property will be assessed by its:

  • Expected rental income
  • Stress test calculations
  • Property type
  • Location
  • Market conditions

These decisions are separate from the residential remortgage, but lenders need clarity on how the funds will be used.

What Lenders Look for When You Remortgage Your Home to Buy a Rental Property

Lenders evaluate both parts of the process: your residential remortgage and your buy-to-let eligibility.

1. Stable personal income

Your residential mortgage must be affordable on your income alone — lenders do not use projected rental income to support your residential affordability.

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2. Good credit conduct

Lenders check for:

  • Missed payments
  • High utilisation
  • Recent credit searches
  • Settled or unsettled adverse credit markers

The stronger your profile, the more likely lenders are to allow capital raising.

3. Your reason for raising capital

Most lenders accept:

  • Buy-to-let deposit
  • Investment purchase
  • Second property

Some do not allow:

  • Business use unrelated to property
  • Repaying some types of unsecured loans
  • High-risk investments

4. Your existing mortgage conduct

Strong conduct over the last 12 months supports a successful application.

5. The type of rental property you want to buy

Lenders may restrict capital raising if you intend to buy:

  • HMOs
  • Multi-unit blocks
  • High-rise flats
  • Non-standard construction

In such cases, specialist lenders are often more flexible.

Pros of Remortgaging to Buy a Rental Property

1. You can enter the rental market without saving a large deposit

Equity replaces the need for upfront savings.

2. You retain your main home

You’re not selling to release equity — just refinancing.

3. Rental income can support long-term investment goals

Income can help offset mortgage costs or support future purchases.

4. Flexible options

You can choose:

  • Standard buy-to-let
  • Company buy-to-let
  • Long-term investment
  • Renovation projects (subject to lender approval)

Risks and Considerations

1. Your residential mortgage will increase

Higher repayments can impact long-term affordability.

2. Rental income is not guaranteed

Void periods or maintenance issues can affect cash flow.

3. Buy-to-let involves higher costs

You may face:

  • Higher stamp duty
  • Letting agent fees
  • Landlord insurance
  • Maintenance and compliance costs

4. Market changes can affect yield

Rental values and mortgage rates may change over time.

5. You are securing the borrowing against your main home

If repayments aren’t maintained, your home could be at risk.

Example Scenarios

Scenario 1: Using equity to fund a 25% buy-to-let deposit

Home equity released: £75,000
Rental property value: £300,000
Deposit required: £75,000
Outcome: Buyer enters the rental market with no additional savings.

Scenario 2: First-time landlord with strong income

Lender accepts capital raising for buy-to-let even if the applicant has no previous landlord history.

Scenario 3: Applicant with minor historic credit issues

Possible with specialist lenders if residential affordability is strong.

Scenario 4: Buying through a limited company

Equity release can still be used as the deposit, subject to lender criteria.

How to Improve Your Chances of Approval

(General Information Only)

1. Check your credit files

Ensure all entries are accurate across Experian, Equifax and TransUnion.

2. Review your bank statements

Avoid:

  • Unarranged overdrafts
  • Returned payments
  • Erratic spending

3. Reduce unsecured debt

This improves affordability calculations on the residential side.

4. Ensure rental estimates are realistic

Letting agent letters or market research strengthen your buy-to-let application.

5. Build sufficient emergency funds

This protects you during void periods or maintenance issues.

6. Confirm that your chosen lender allows capital raising for buy-to-let

Not all lenders support this purpose.

Summary

You can remortgage your home to buy a rental property, and many homeowners use this route to enter or expand in the investment property market. Success depends on:

  • Your equity
  • Residential affordability
  • Rental stress test results
  • Property type
  • Credit profile
  • Lender criteria

With careful planning, remortgaging can be a practical way to fund a buy-to-let investment.

This article provides general information only. For personalised support, regulated mortgage advice is required.

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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.