Yes, you may be able to remortgage your current property to help buy another one. By taking a larger mortgage, you can release funds towards a deposit or, if enough is available, the full purchase price.
This is additional borrowing, not free money from your home. The lender must accept the purpose and assess the proposed loan. If you also need a mortgage on the property you are buying, that application needs to work alongside the remortgage.
The right approach depends on whether the second property will be another home for you, a rental investment, or your new main residence while you let out the old one. Having equity alone does not guarantee that the full plan is affordable or suitable.
How does remortgaging to buy another property work?
A capital-raising remortgage replaces your existing mortgage with a larger one. Part of the new loan repays the old mortgage, and the remaining funds are available for the agreed purpose, after any costs paid from the proceeds.
Those funds can form some or all of the deposit for the next property. A separate purchase mortgage may cover the remaining price. The deposit has therefore come from borrowing secured against your current property, even though it is paid to the seller as cash.
Both lenders need an accurate picture of the arrangement. The purchase lender must accept the deposit source, and the remortgage lender must allow the intended use of the money. Do not describe borrowed funds as savings.
If your current property is mortgage-free, taking out a mortgage against it may also be possible. See I own my house outright—can I remortgage?
How much equity could you release?
Equity is broadly the property's value minus the borrowing secured against it. You cannot assume that all of this can be withdrawn: affordability, loan-to-value limits and lender criteria restrict the new mortgage amount.
A simple example
Suppose your home is valued by the lender at £300,000 and your existing mortgage balance is £150,000. If a lender approved a new mortgage of £225,000:
- The new loan-to-value would be 75%: £225,000 divided by £300,000.
- The potential cash released would be £75,000: £225,000 less the £150,000 existing balance, before fees and any early repayment charge.
- Your mortgage on the current home would become £225,000. Any mortgage on the new property would be additional debt.
This is an illustration, not a borrowing limit, lender offer or customer case. A lower valuation or affordability assessment could reduce the available amount. You also need a separate budget for purchase costs and a financial reserve.
Read Do you need a valuation to remortgage? for more on the lender's property assessment.
How will you use your current home and the new property?
The mortgage must match the use of the property it is secured against. These common plans can require different arrangements:
| Your plan | Possible approach |
|---|---|
| Keep living in your current home and buy another home for your own use | Capital raising on your current home, with a suitable second-home residential mortgage on the new property if further borrowing is needed. |
| Keep living in your current home and buy a property to rent out | Capital raising on your current home, with an appropriate buy-to-let mortgage on the rental property if needed. |
| Move to a new home and rent out your current property | A let-to-buy arrangement may be suitable: financing the retained property for letting and arranging a residential mortgage on the new home. |
Buying a property to rent out
A buy-to-let lender normally assesses expected rental income against its lending calculation, as well as the deposit, property and applicant criteria. Your estimate of the rent is not a guarantee of the figure the lender will accept. Learn more in the buy-to-let journey.
Moving out and letting your current home
Let-to-buy generally involves arranging suitable letting finance on the home you retain while buying another property to live in. Some lenders require the transactions to complete together.
Do not assume your existing residential mortgage permits letting. Your lender may consider consent to let, or a suitable buy-to-let remortgage may be needed. Consent to let does not itself provide extra borrowing.
Holiday letting, occupation by relatives, mixed personal and rental use, and overseas purchases need separate checks. They should not automatically be treated as ordinary buy-to-let.
What will lenders check?
The applications need to reflect your position after the purchase, not just what you currently pay. Relevant information can include:
- Your income, regular expenditure, credit history and other debts.
- The proposed mortgage balances, payments and terms on both properties.
- Each property's value, condition, ownership and intended use.
- The amount and source of the deposit, including the remortgage proceeds.
- Expected rental income and any other properties you already own.
Do not assume rental income will cancel out another mortgage payment in an affordability calculation. Lenders assess background properties and rental income differently. Approval of one mortgage does not guarantee approval of the other.
What costs and taxes should you allow for?
You may have costs for both the remortgage and the purchase. Budget for lender product fees, any early repayment charge, valuations, purchase surveys, conveyancing and searches, registration costs and appropriate insurance.
A remortgage legal package should not be assumed to cover conveyancing for the separate purchase. Ask for an itemised quote and check which costs are payable even if a transaction does not complete. See the remortgage costs guide.
Property purchase taxes
The relevant purchase tax depends on where the property you are buying is located:
- England and Northern Ireland: Stamp Duty Land Tax, including higher rates where applicable.
- Wales: Land Transaction Tax, with separate higher residential rates.
- Scotland: Land and Buildings Transaction Tax, with an Additional Dwelling Supplement where applicable.
Keeping another property can mean a higher tax bill. The position depends on the buyers, existing ownership and whether a main residence is being replaced. Exceptions and possible refunds have conditions; do not budget on receiving one without checking.
Ask your conveyancer or tax adviser to confirm the calculation. Rental income and a later sale may also have tax consequences, and a limited-company purchase needs its own assessment.
How do you coordinate the remortgage and purchase?
- Set out the full plan. Confirm which property you will live in, what will be rented out, who will own each property and how much you need.
- Check feasibility before committing. Review equity, affordability, deposit-source rules and the full purchase budget for the proposed arrangement.
- Compare suitable funding options. Consider the remortgage alongside any suitable additional borrowing from your current lender.
- Prepare both applications where needed. Provide consistent income, mortgage and property information, plus evidence showing where the deposit will come from.
- Coordinate valuations, offers and legal work. Agree the sequence with your adviser and conveyancer. Some arrangements require the same solicitor or simultaneous completion.
- Confirm funds and conditions before becoming legally committed. Your conveyancer should confirm that the funding arrangements support the purchase timetable. An agreement in principle is not a mortgage offer.
If remortgage funds are released before the purchase completes, interest on the increased borrowing can start before you have the new property. If the purchase falls through, the remortgage does not automatically unwind. Discuss the timing and what happens if either transaction is delayed.
Read How long does a remortgage take? and Do I need a solicitor to remortgage? for the underlying stages.
What are the risks and alternatives?
Borrowing against your home puts it at risk if repayments are not maintained, even when the money buys a separate investment property. If both properties have mortgages, each property securing a loan may be at risk.
Plan for higher payments when rates change, a fall in income, repair bills and periods without rent. Property values can fall, and a future sale may not leave enough to repay everything you expect. Interest-only borrowing also needs a credible plan for repaying the capital.
A remortgage is not the only route. A further advance from your current lender may let you keep the existing mortgage and borrow a separate additional amount, subject to approval. Compare the combined costs and terms.
A second-charge loan is another possible form of secured borrowing, but it is different from a mortgage on a second property and needs a separate suitability assessment. Selling your current property or delaying the purchase to save more may avoid increasing the debt secured on it.
Get help with your options
I can review your current mortgage, the proposed purchase and how you intend to use both properties. I can then compare suitable mortgage options and explain the funding requirements, costs and timing. I cannot guarantee approval, a valuation or the investment performance of a property.
I do not charge a mortgage broker fee. If I arrange your mortgage, I receive commission from the lender on completion. Lender fees, legal costs, valuation fees, property taxes and early repayment charges may still apply.
Book an initial call or learn more about my remortgage advice.
This guide provides general information, not a personal mortgage recommendation, tax advice or legal advice. Lender criteria, products and tax rules can change.
Your home may be repossessed if you do not keep up repayments on your mortgage.