How to Change Mortgage to Buy to Let in Peterborough
By Wayne Beecham | Created on 5th May 2025
If you are considering renting out your existing home, or building a property portfolio, you must have the correct type of mortgage. In most cases, if you decide to rent out your property, you must switch from a residential mortgage to a buy-to-let mortgage.
There are many reasons people decide to rent out their homes. They may actively want to take their first step into property investment or be accidental landlords who rent their property because they have to, rather than solely to make money.
Whatever your reasons, the rental market in Peterborough is strong and it’s possible to make a success of renting out a property in the area. The average rent for properties in Peterborough increased by just over 9% between March 2024 and March 2025, according to the ONS. In neighbouring Northampton, the average rent for buy-to-let properties is around £1,270 pcm according to Home.co.uk and in Wellingborough, the average rent is just under £1,040 pcm.
If you are considering renting out a property you own, you may need to change your mortgage type. This article covers everything you need to know about how to change your mortgage to buy-to-let.
What Is A Buy To Let Mortgage?
A buy-to-let mortgage is a specialist type of mortgage for landlords who want to buy a property to rent it out, as opposed to living in it themselves.
While you may not be a first-time buyer, the process could hold surprises. A buy-to-let mortgage differs from a residential mortgage in several ways.
1. Higher interest rates
Buy-to-let mortgages generally have higher interest rates than residential mortgages, as there is a higher risk to the lender. Buy-to-let mortgages are around 1% more than residential mortgages.
Mortgage deals on offer can quickly change, but as a guide, current buy-to-let interest rates range from 4.41% to 5.38% products with Barclays, 4.04% to 4.79% deals from HSBC, and 2- and 5-year fixed at 4.62% and 4.68% with Halifax.
2. Bigger deposit required
Lenders also require a larger deposit for buy-to-let mortgages, usually requiring at least 25% of the property value to be paid as a deposit. Residential mortgage deposits typically start at a minimum of 10%. If you are converting a residential mortgage to a buy-to-let, you won’t need a deposit, but you will need adequate equity in the property.
3. Income and rental yields considered
Mortgage lenders also consider your current, personal income when deciding the amount you can borrow – and will require a certain projected rental yield. You can use a rental yield calculator to estimate this. The current average rental yield in Northampton of 6.08%, and 6.24% in Peterborough, according to Zoopla, though of course, your exact figures will vary.
3. Interest only mortgages
Most buy-to-let mortgages are interest-only, so you are not paying the capital off. The full mortgage loan amount must be repaid in one lump sum, either at the end of the mortgage or when the property is sold. If you plan on keeping the property at the end of the mortgage term, you will need the finances to do so.
Do I Have To Change My Mortgage To Buy To Let?
Your long-term plans will determine whether you will need to change your mortgage to a buy-to-let. If you will be renting your home out for a short period only, you might be able to get a ‘consent to let’ from your mortgage provider.
Consent to let details: This arrangement is intended for short-term periods of usually less than 12 months. Most mortgage providers will charge a fee of around £75 to £300, but ask your mortgage provider whether they are prepared to provide consent to let.
If you plan to rent the property for a more extended term, you will undoubtedly require a buy-to-let mortgage. You can ask your existing residential mortgage provider about switching to buy-to-let, but you do not need to stay with them. Taking out a buy-to-let mortgage with a new provider may make more financial sense.
When Could ‘Consent To Let’ Be An Alternative?
If you’re wondering ‘how do I change my mortgage to buy-to-let for a short time?’ then ‘consent to let’ may be suitable. ‘Consent to let’ is your current lender’s permission to rent your property out for around 6-12 months. For example, renting the property temporarily while you’re posted abroad or travelling, and intend to return to the property after a short time, or while you prepare to sell.
Your lender will usually charge a fee of £75 to £300 to provide you with ‘consent to let’. However, as you remain on your existing residential property mortgage, you would avoid the early repayment charge attracted by changing to a buy-to-let mortgage.
The application process for a ‘consent to let’ is relatively straightforward compared to applying for a new mortgage, though you must still meet the criteria. Your mortgage advisor will typically check that your mortgage payments are up to date, perform a credit history check, and expect you to hold around 25% equity or more. They will also ask why you plan to rent your property out, how long for, and what monthly rental income you will receive.
The decision usually takes just 1-2 weeks. Before your lender will agree to a ‘consent to let’, you must sign the new terms and conditions, put a standard lease in place such as an assured shorthold tenancy, and speak to your insurer.
Considerations When Changing My Mortgage To Buy To Let
If your situation does not meet the criteria for getting a ‘consent to let’, you will need to switch to a buy-to-let mortgage. Getting approved for a buy-to-let mortgage can be more complex than a residential mortgage, as there are stricter criteria to meet:
1. Stricter affordability rules
Most lenders have strict affordability criteria for buy-to-let mortgages and the Interest Coverage Ratio will require your rental income to be at least 125% of the monthly mortgage payments. Buy-to-let affordability calculators, once known as stress tests, are focused more on the rental income than your personal income and expenditure, which are the focus of residential mortgage applications.
2. Loan to value (LTV) considerations
If there is sufficient equity in the property, there won’t be a requirement for a deposit, but the loan to value (LTV) must be a substantial amount. The more equity you have, the better mortgage rates you can access.
3. Type of rental property
The mortgage provider will also want to know what type of buy-to-let property the mortgage is for. Types of buy-to-let property include a normal tenancy, holiday let or HMO (House of Multiple Occupation).
4. Your living situation
You will need to confirm what your living situation is going to be, including the address that you will be living at if you are moving in with someone else and whether you will be paying rent or other accommodation costs.
5. Your credit history
The credit history criteria are stricter for buy-to-let mortgage applicants. Lenders may overlook some credit issues for a residential mortgage, but these will not be accepted for a buy-to-let mortgage.
6. Your landlord experience
Mortgage lenders may also consider whether you have any previous experience as a landlord, as experienced landlords are deemed a lower risk. Landlords who rent out several properties or are building a property portfolio often gain access to more favourable mortgage deals.
7. Get a buy-to-let agreement in principle
As when buying a house, you can get a decision in principle. This allows you to check it’s affordable without affecting your credit score, or committing to taking your mortgage application forwards.
Costs involved when switching to buy-to-let
Budget for initial and ongoing costs when changing to a buy-to-let mortgage. There may be early repayment charges (ERC) on your original deal when you change residential mortgage to buy-to-let, as well as legal fees and arrangement fees on the new deal. While repayments are interest-only, there are higher interest rates and buy-to-let insurance premiums to pay. If you arrange ‘consent to let’ instead, you will have to pay the fee.
Don’t forget, as a landlord your outgoings will include maintenance, essential safety checks, and EPC and letting agents’ fees. You also need to pay tax on your profits.
Is It Illegal To Rent Out A Property Without A Buy To Let Mortgage?
No, unless you have committed mortgage fraud by applying for a residential mortgage with the full intention to rent the property, renting out a property without a buy-to-let mortgage is not illegal.
However, it is a breach of the mortgage terms unless you have obtained a ‘consent to let’. Your mortgage provider could demand that you repay the entire outstanding loan amount if they find out you have not informed them that you are renting the property out while on a residential mortgage.
Where To Go For Swapping Your Mortgage To Buy To Let
There are three main options when you are considering swapping your mortgage to buy to let:
1. Current mortgage lender
The easiest place to start is to speak to your current mortgage lender to see what buy-to-let mortgage deals they offer. However, you should still shop around the mortgage market for the best deals. Going with your current mortgage lender may reduce some of the paperwork, but you don’t want to end up paying more than you need to for a buy-to-let mortgage.
Plenty of online mortgage calculators can give you a reasonable estimate of the fees and interest rates involved with different mortgage providers.
2. High street mortgage lenders
You could approach other high street lenders and switch your mortgage to a different lender. You may be subject to an early repayment charge if you are still within the mortgage term.
3. Specialist mortgage broker
Another option is to use a specialist mortgage broker with extensive knowledge of the current buy to let the mortgage market. They can find you the best possible deals based on your specific circumstances, including deals that may not be available through high street lenders. You may have to pay a fee, though some brokers provide their services for free, charging the lender rather than the borrower.
Can I Live In My Buy To Let Property?
No, living in your buy-to-let property will breach the mortgage terms and conditions, so you should switch to a residential mortgage if you plan on moving back into your property.
Do You Pay Stamp Duty When Changing A Mortgage To Buy-To-Let?
You won’t typically attract stamp duty if the property isn’t changing hands. However, you may pay stamp duty when changing your residential mortgage to buy-to-let if you buy out a joint owner, transfer ownership to someone else or into a limited company, or are buying a new home as your main residence.
What Insurance Will I Need When I Change Mortgage To Buy To Let?
As with any type of mortgage, your lender will require building insurance for the property. When you change to a buy-to-let mortgage, your lender will also usually need you to take out specialist landlord buildings insurance to cover your property for the increased risk of tenants damaging your property.
Landlord insurance is not a legal requirement, but it can cover you against risks such as legal disputes with tenants, unpaid rent, and damage caused by tenants.
There are different types of landlord insurance, and you will need to decide whether you want to pay more for extra cover, like loss of rent, property owner’s liability, and alternative accommodation cover.
Feel confident about changing to a buy to let mortgage?
If you are considering renting out a property you already own in Peterborough and the surrounding areas of Cambridgeshire and Northamptonshire, we can advise on changing your mortgage to a buy-to-let and all aspects of becoming a landlord.
We can provide a tenant finding service including credit and reference checks and manage the tenancy on your behalf. You might also be interested in our rent guarantee scheme. Contact us today to find out how we can help.
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Wayne Beecham
Wayne is East Midland’s answer to property management. His hard work and high standards of service have gained him a fierce reputation within the regional lettings market. He knows what it takes to own and manage a profitable portfolio himself, because he is not only a successful investor and landlord, but co-founder and “hands on” managing director of Progressive Lets.
The team is really professional and time conscious. Had a smooth move in as well.
Rita Davey
Very good communication and friendly service, long may it continue. Thank you guys at Proggesive Lets!
Michael Wadham
Very friendly and professional service by Joe Mulhearn throughout the rental application process.
prince sarfo
Lovely timely response and assistance.
Very good
Keep it up
Olamide Ige
Wow!!! Zoe is an amazing soul. Very helpful and accommodating. The sky is the limit for her!!! She did an amazing job.
To Zoe, God bless you more and more ❤️
Grzybobranie
Been renting with them for over 3 years now and overall had a good experience. Of course over that amount of time there were a few issues here and there, which is pretty normal, but whenever I needed help Kieron was always easy to deal with, helpful and quick to respond. Communication was always str...
Aghogho Braimah
Progressive Lets is a very good and professional lettings agency. As a it was my first time letting a property, the company particularly the property manager Tam, was very patient and kind best believe I had too many questions to ask. I highly recommend Progressive Lets to anyone looking to rent ...
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