What are consumer buy to let mortgages?

Consumer buy-to-let mortgages were introduced as part of the FCA’s Mortgage Credit Directive of 2016, which split the buy-to-let mortgage market in two, leading to consumer buy-to-let mortgages and business (or standard) buy-to-let mortgages. 

The difference between the two can be summarised as follows:

Consumer buy-to-let mortgages are a relatively new form of mortgage that was introduced to the market in 2016. 

They are regulated in the same way as residential mortgages, which means the borrower enjoys more protection than they would with a standard, business buy-to-let mortgage intended to help landlords buy a property to rent out to tenants. 

To qualify for a consumer buy-to-let mortgage, you will have to meet strict affordability criteria that look at both your income and the rent you can expect to receive. 

It’s a similar process to taking out a standard mortgage to buy a home - with a few extras added on. 

Standard, or business, buy-to-let mortgages are for professional landlords who intend to run rental properties as a business. 

Consumer buy-to-let mortgages are for people who end up renting out a property they already own or inherit, for example, because they are moving in with a partner.

Features of standard buy-to-let mortgages include:

You can find out more about the standard buy-to-let mortgage application process in our guide on how to become a landlord. 

Consumer buy-to-let mortgages are:

Most standard mortgage contracts require you to live in the property. So if you own a property with a mortgage, you can’t just move out and start renting it out without telling your mortgage lender. 

In fact, failing to inform your lender you are letting your home could lead to heavy penalty fees or even result in your mortgage being withdrawn altogether. 

So if your plans have changed and you’re going to become a so-called “accidental landlord”, you need to remortgage to a consumer buy-to-let deal. 

Here are a few examples of scenarios where this may apply:

You should be eligible for a consumer buy-to-let mortgage if you are letting out your home to cover your mortgage costs while you are overseas.

If you inherit a house and that property still has an outstanding mortgage, you could remortgage to a consumer buy-to-let deal in order to rent out the property.

If you are moving to a new property but don't wish to sell your old home, you can cover any mortgage payments - and hopefully, make some money to boot - by letting out your old home and transferring your residential mortgage onto a consumer buy-to-let deal. 

If both you and your partner own a home and you intend to move in together, you could apply for a consumer buy-to-let mortgage in order to let out the other property.

Whether or not you can get a buy-to-let mortgage will depend on a number of factors, including how much you earn, what other debts you have, the deposit you can put down, and the rental income you can expect to receive. 

As consumer buy-to-let mortgages are not designed for professional landlords, applicants generally have to show that: