What Is a Consumer Buy to Let?

If you have ever been at a stage of research when you keep wondering, what is a consumer Buy to Let?, you are not alone in this. Many would-be property investors assume that all Buy to Let mortgages are exactly the same, but there are some very important differences depending on why you are renting out a property.

A consumer Buy to Let mortgage is one that is designed for people who become landlords by circumstance rather than doing so by choice. Unlike a more traditional Buy to Let investor who purchases a property specifically with the goal in mind of renting it out, a consumer Buy to Let borrower is usually someone who ends up letting a home that was originally intended to be their own residence.

Understanding how these mortgages work is actually very important because they are regulated differently from standard Buy to Let products. Choosing the right mortgage can make the process run much more smoothly and can also help to make sure that you meet both lender requirements and your own long term financial goals.

If you have just started researching Buy to Let borrowing, you may also find our Buy to Let questions answered guide helpful for explaining some of the most common mortgage queries. 

So, what is a Consumer Buy to Let mortgage?

A consumer Buy to Let mortgage is one that is intended for people who unexpectedly find themselves becoming landlords. This could happen for many different reasons, including:

• You inherit a property and then make the decision to rent it out.
• You move in with a partner but wish to keep your previous home.
• You have to relocate for work but still want to retain ownership of your property.
• You struggle to sell your home and then choose to let it instead.

In all of these situations, becoming a landlord was not part of an investment strategy, but instead, renting the property is actually often the most practical solution.

Because of this, consumer Buy to Let mortgages fall under a different set of regulations when compared with investment Buy to Let mortgages.

How is a Consumer Buy to Let Different From a Standard Buy to Let Mortgage?

The main difference between the two is the initial reason for purchasing or keeping the property.

With a more standard Buy to Let mortgage, the borrower will buy a property with the specific intention of using the asset to generate rental income and benefit from future capital growth, which is considered a commercial investment.

With a consumer Buy to Let mortgage, the property was purchased with the original intention of being lived in by the owner and renting it out happens because of a change of circumstances.

Lenders will often ask questions about your situation in order to determine which type of mortgage is the most appropriate.

Why Does This Difference Matter So Much?

The distinction matters here because consumer Buy to Let mortgages receive additional regulatory protection.

As these types of borrowers are usually much less experienced landlords, lenders are expected to make sure that the mortgage is suitable for their own unique circumstances. This creates a process that shares similarities to arranging a residential mortgage rather than a purely commercial investment loan.

For many borrowers, this will provide an extra layer of reassurance when navigating an unfamiliar situation.

Who is Able to Qualify for a Consumer Buy to Let Mortgage?

Every lender will have their own criteria, but you may qualify if you are renting out a property that was not originally purchased with the intent of it being used as an investment.

Some of the more common examples include:

• Moving away for work purposes.
• Relocating with a partner.
• Inheriting a home.
• Keeping your current property after you have bought another home.
• Temporarily letting your home while living elsewhere.

Lenders will usually want to gain a full understanding of your reasons for letting the property out and whether it genuinely falls outside of what they would deem a professional property investment.

Can You Switch to a Consumer Buy-To-Let from a Residential Mortgage?

In many cases, yes you can, if you already have a residential mortgage but then need to rent out your property. Your first step here should always be speaking with your existing lender.

Some lenders may then grant what is known as Consent to Let, which allows you to rent the property without changing your mortgage immediately. This is often suitable for shorter term arrangements.

However, if you do expect to let the property for a longer period of time, your lender may need you to move over onto a consumer Buy to Let mortgage instead.

Every lender approaches this differently, so seeking professional advice before making any decisions is important. If you are planning to make the switch, our guide on how to change your mortgage to Buy to Let explains the process in more detail and what lenders are likely to consider. 

How Do Lenders Assess a Consumer Buy to Let Application?

Although all lenders will have their own unique set of requirements, they will usually be considering many different factors, such as:

• Your personal income.
• The expected rental income.
• The property's current market value.
• Your existing mortgage commitments.
• Your own credit history.
• Your reasons for renting out the property.

Unlike some investment Buy to Let mortgages that will rely more heavily on rental income calculations, lenders who are offering consumer Buy to Let products are likely to take a little bit more of a rounded view of your personal financial circumstances.

Are The Interest Rates Different on Consumer Buy To Let Mortgages?

Interest rates can vary a fair amount depending on the lender and the size of your available deposit or the equity you hold in the property, along with your own financial circumstances and the wider market conditions.

Consumer Buy to Let mortgages are not automatically any cheaper or more expensive than standard Buy to Let mortgages.

The best option will always depend on your own individual circumstances, which is why comparing products across the market is so important.

As an independent Buy to Let mortgage broker, Vincent Burch can help you to fully understand which lenders may be suitable for your own situation and explain all of the differences between available products.

Do You Need To Have a Deposit?

If you are looking to re-mortgage your existing home onto a consumer Buy to Let mortgage, you may not need to provide a cash deposit. Instead, the amount of equity that you already have in the property will be considered instead.

If you are in the process of purchasing another home at the same time, lenders will assess both of these mortgage applications together so they can make sure that the borrowing remains affordable.

The level of equity required will vary between lenders.

Is a Consumer Buy to Let The Right Choice for You?

A consumer Buy to Let mortgage may be suitable if you never actually intended to become a landlord but your circumstances have changed.

For example, you may be in the process of relocating or have inherited a property and you are choosing to keep your existing home instead of selling it.

The right mortgage will depend on different factors such as:

• Your own future plans.
• How long you expect to rent the property for.
• Your own personal income.
• Your overall financial commitments.
• The amount of equity available.

Because each and every situation is different, receiving more personalised advice can help to avoid any unnecessary costs or delays.

All of our advisers at Vincent Burch take their time when it comes to understanding your own unique circumstances before searching the market for suitable mortgage options, which helps to make the process as straightforward as possible.

How Can a Mortgage Broker Help?

Consumer Buy to Let mortgages are actually much more specialised than many people realise.

An experienced mortgage broker can help you with:

• Explaining whether you need a consumer Buy to Let mortgage or there is another option that is better suited
• Comparing lenders across the market.
• Identifying products that are suited to your own circumstances.
• Managing paperwork and communication throughout the application.
• Helping to avoid any common mistakes that could delay approval.

At Vincent Burch, our team works with clients across the UK, providing clear and impartial mortgage advice that is always designed around individual circumstances.

Conclusion

Understanding what is a consumer Buy to Let is an important first step if you ever happen to find yourself unexpectedly becoming a landlord.

These mortgages are specifically designed for people whose circumstances have changed for any reason, rather than those who are investing in property as a planned business investment. While they do share many similarities with standard Buy to Let mortgages, they are regulated slightly differently and will often involve a more personalised assessment by lenders.

If you are slightly unsure which mortgage is right for your own situation, then speaking with an independent mortgage adviser can provide clarity before it comes to making any big decisions. Vincent Burch can help you explore your options and guide you through the process from start to finish.

Frequently Asked Questions

What is a consumer Buy to Let?

A consumer Buy to Let is a mortgage designed for people who become landlords because of changing personal circumstances rather than purchasing a property specifically as an investment.

Who needs a consumer Buy to Let mortgage?

You may need one if you plan to rent out a property that was originally your home, such as after relocating, inheriting a property or moving in with a partner.

Is a consumer Buy to Let regulated?

Yes. Consumer Buy to Let mortgages are regulated differently from standard Buy to Let mortgages, offering additional protections for borrowers.

Can I rent out my home without changing my mortgage?

Possibly. Some lenders offer Consent to Let for temporary arrangements. If you plan to let the property for a longer period, a consumer Buy to Let mortgage may be required.

Can first time landlords get a consumer Buy to Let mortgage?

Yes. In fact, many consumer Buy to Let borrowers are first time landlords who have found themselves renting out a property because their circumstances have changed.

Can Vincent Burch help with consumer Buy to Let mortgages?

Yes. Vincent Burch provides independent mortgage advice and can help you understand your options, compare lenders across the market and find a mortgage suited to your circumstances.