Buy-to-let remortgages: switching lender and releasing equity

What a buy-to-let remortgage is

A buy-to-let remortgage is a new mortgage on a rental property you already own. It repays and replaces the existing loan, usually with a different lender, and the tenancy carries on.

A product transfer is different: you take a new rate from your current lender and nothing else changes. A remortgage opens up other lenders and lets you change the loan, in return for a full application. Like all buy-to-let mortgages, it is assessed mainly on the rent.

Why landlords remortgage, and who it suits

The common reasons are:

• A fixed rate is ending. The mortgage then normally moves to the lender's variable rate, which is often higher.
• Releasing equity. A larger loan can fund the deposit on another purchase or pay for works.
• Consolidating. Separate borrowing secured on the same property is brought into one loan.
• Repaying a bridging loan. A property bought or improved with short-term finance moves to a term mortgage once it is ready to let: see bridge to let.
• The property has changed. Your lender may not suit a house that is now a house in multiple occupation (HMO), or a portfolio that has grown.

A remortgage suits you if the property is let or ready to let, the rent supports the loan and any early repayment charge has ended or soon will. It rarely suits you if a large charge still applies, the rent would fail a new lender's test or you plan to sell soon. A building with a shop or office in it is a commercial case: see commercial remortgage.

Remortgage, product transfer or further advance

How a buy-to-let remortgage works, step by step

1. Find out what leaving costs. Ask your lender for a redemption statement showing the balance, any early repayment charge and its end date.
2. Review. We check the property, rent, loan and ownership, and compare a product transfer with a move.
3. Application. A suitable lender gives an agreement in principle. You then supply the tenancy agreement, evidence of rent and identification.
4. Valuation. The lender's valuer confirms the value and the market rent, and the lender relies on those figures.
5. Offer and legal work. The lender issues an offer, and a solicitor or conveyancer checks the title, the tenancy and any licence.
6. Completion. The new lender's funds repay the old mortgage, and any money raised is paid to you after costs.

The rental cover test on a remortgage

A new lender tests the rent again. It works out the monthly interest at a notional stress rate and requires the rent to exceed it by a margin, the interest cover ratio (ICR). Rental cover is the monthly rent divided by the monthly interest at the stress rate.

The standards come from the Prudential Regulation Authority (PRA), part of the Bank of England. Its September 2016 supervisory statement sets expectations for the lenders it regulates, not rules for borrowers, and each lender writes its own criteria.

• Cover ratio. The statement records 125% as the industry's standard minimum, not a PRA minimum. Lenders are expected to allow for letting costs and the landlord's tax position, and typically ask for 125% to 145%.
• Stress rate. Lenders are expected to allow for a rise in rates of at least 2 percentage points and to assume a rate of at least 5.5% over the first five years. That does not apply where the rate is fixed or capped for five years or more.
• Like-for-like remortgages. The statement excludes a remortgage with no additional borrowing, so some lenders test a straight switch differently. That is the lender's decision, so do not rely on it.

An updated statement takes effect on 1 January 2027 and keeps these figures.

Illustration only. On a £200,000 interest-only loan tested at 5.5%, monthly interest is about £917. At 125% cover the rent must be about £1,146 a month, and at 145% about £1,329. Try your own figures in the buy-to-let mortgage calculator. The real figure comes from the lender's offer.

If the rent does not cover the loan you want

The usual options are below. None is certain to be available, because each lender sets its own test.

• Borrow less. Reduce the loan, or pay down part of the balance, until the rent covers it.
• Top-slicing. Some lenders let spare personal income cover a shortfall, and then assess your income and outgoings too.
• A longer fixed period. A five-year fixed rate is often tested at a lower stress rate, but it ties you in for longer.
• A product transfer. Your current lender may offer a new rate without retesting the rent.
• A limited company lender. Lenders often ask companies for less cover than higher-rate taxpayers who own personally. That only helps if a company already owns the property.

Releasing equity: what lenders accept

You can borrow more than you owe if the value and the rent both support the larger loan. Equity alone is not enough: the PRA expects lenders not to base affordability on a property's equity or on expected price growth. Many lenders lend up to 75% of the value and some up to 80%.

The lender will ask what the money is for. A deposit for another investment property, works to a property you let and repaying other property borrowing are widely accepted. Policies differ on other uses, such as funding a trading business or repaying unsecured debts, so state the purpose at the start.

What lenders check on the property and the tenancy

Energy performance. In England and Wales, a property covered by the minimum energy efficiency regulations cannot be let, or continue to be let, with an energy performance certificate (EPC) rating below E unless a valid exemption is registered. That has applied since 1 April 2020. A property that cannot lawfully be let cannot earn the rent, so lenders check the certificate. A standard equivalent to EPC C is planned from 1 October 2030 but was not law in October 2026: see the landlord guidance on GOV.UK.

Tenancy. In England, Part 1 of the Renters' Rights Act 2025 came into force on 1 May 2026. Most private tenancies are now assured periodic tenancies, and section 21 notices can no longer be used. Mortgage conditions were often written around fixed-term assured shorthold tenancies, so ask what the new lender requires and check the current position on GOV.UK. A landlord database and an ombudsman are planned from late 2026.

Licences. In England and Wales, an HMO rented to five or more people from more than one household must be licensed. Councils can extend licensing to smaller HMOs and, in England, to other rented homes in designated areas. A lender will expect to see any licence that is required: see HMO mortgages.

Your other properties. The PRA expects lenders to treat a borrower with four or more mortgaged buy-to-let properties as a portfolio landlord and to assess the whole portfolio, so have a property schedule ready: see portfolio landlord mortgages.

What it costs to switch

Costs come from the lender you leave and the lender you join.

• Early repayment charge. Charged by your current lender if you repay during a fixed or discounted period, usually as a percentage of the balance.
• Exit fee. An administration charge some lenders make for closing the account.
• Arrangement fee. The new lender's product fee. If it is added to the loan, you pay interest on it.
• Valuation and legal costs. Some products include a free valuation or the standard legal work, and others do not. Check what the offer covers.
• Broker fee. Ask for any fee in writing before you apply.

To weigh them, add every cost of switching to the interest over the new fixed period, then compare that total with a product transfer and with staying on the variable rate. If an early repayment charge ends soon, compare paying it now with completing after it ends.

Moving a property into a limited company is not a remortgage

A company is a separate legal person. To move a rental property from your own name into a company, you sell it and the company buys it. Your mortgage is repaid and the company takes out a new one, assessed as a purchase.

Because it is a sale, tax can arise. The company may have to pay Stamp Duty Land Tax in England and Northern Ireland (Scotland and Wales have their own taxes). You may have to pay Capital Gains Tax on any gain. See HMRC's guidance on the higher rates of Stamp Duty Land Tax and on purchases by corporate bodies, and take advice from an accountant before you start. For the lending side, see limited company buy-to-let.

If you did not set out to be a landlord

Financial Conduct Authority guidance treats a buy-to-let mortgage that is not taken out wholly or mainly for business purposes as a consumer buy-to-let mortgage, with its own rules. You are treated as acting for business purposes if you bought the property intending to let it and neither you nor a close relative has lived in it. The same applies if you already own another let property. Someone letting a former home, with no other rental property, may fall on the consumer side, depending on the facts. A firm must be registered with the FCA to lend, arrange or advise on consumer buy-to-let, so say how you came to own the property and check the firm on the FCA Register.

Risks and how the mortgage is repaid

Many buy-to-let mortgages are interest only, so the full loan is still owed at the end of the term. It is repaid by selling the property, refinancing again or using other funds.

• A rental property used as security can be repossessed if the mortgage is not paid.
• Releasing equity increases what you owe and the interest the rent must cover.
• Rates may be higher when the next fixed period ends, and the rent may not pass the test then.
• A new fixed rate brings a new early repayment charge.

What to have ready

• A redemption statement, with the end date of any early repayment charge
• The tenancy agreement and evidence of the rent
• The EPC and any property licence
• The amount you want and what any extra money is for
• A schedule of your other properties, with values, loans and rents
• Proof of identity, address and income
• Company details, if a company owns the property

Ask for a quote and tell us when your current rate ends.