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What are consumer buy to let mortgages?

Consumer, or regulated, buy-to-let mortgages are regulated by the Financial Conduct Authority (FCA) in the same way as residential mortgages and are aimed at individual, part-time landlords rather than professional landlords. Find out how consumer BTL (buy to let) mortgages work.
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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:

  • Business buy-to-let mortgages are for professional landlords who run their rental properties as a business

  • Consumer buy-to-let mortgages are governed by the same rules as residential mortgages and are designed to offer consumer protection for individual, part-time landlords

Compare buy to let mortgages

Looking for a buy to let mortgage? Our comparison tables show you a range of different fixed, variable or tracker buy to let mortgages.

How do consumer buy-to-let mortgages work? 

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. 

How do consumer buy-to-let mortgages differ from standard buy-to-let mortgages?

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:

  • They are classed as a business loans rather than a residential mortgages - so you’ll generally need to put a business plan together to get a business buy-to-let mortgage

  • The rental income you stand to earn is taken into account when the lender assesses the affordability criteria

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:

  • Classed as residential mortgages - so you’ll need another (main) source of income, and the lending criteria you have to meet to get one is more stringent because defaulting could result in you losing your home

  • Regulated by the FCA and therefore offer greater consumer protection than standard buy-to-let mortgages

Do I need a consumer buy-to-let mortgage? 

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:

1. Going travelling

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.

2. Inheriting a relative's property

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.

3. Moving but not selling

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. 

4. Moving in with a partner 

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.

Consumer buy-to-let mortgage eligibility criteria 

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:

  • They did not buy the property (or are not buying a new property) with the intention of letting it out

  • Property rental is not their main job

  • They or a relative have previously lived in the property

  • They don’t own any other rental properties

Compare buy to let mortgages

Looking for a buy to let mortgage? Our comparison tables show you a range of different fixed, variable or tracker buy to let mortgages.