Family buy to let mortgage

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Can you rent to a family member with a buy to let mortgage?

Investing in a buy-to-let property can be a smart move. However, there are situations where the goal isn’t just about making money, but rather helping out your family. In such cases, you may wonder what kind of mortgage you should go for, if there are specific requirements, or if you need a better credit score. Let’s dive into what a family buy-to-let mortgage is and how you can secure one

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What is a family buy to let mortgage?

When you’re thinking about renting out a property, the type of mortgage you need can vary. If you’re planning to rent to strangers, a standard buy-to-let mortgage is the way to go. But if your tenant is a family member, that’s a different story. You’ll require a family buy-to-let mortgage, sometimes called a regulated buy-to-let mortgage, which is designed for those who want to rent their property to family members.

Now, why is it regulated? Well, mortgage lenders see it as a bit riskier when you’re renting to relatives. When you’re dealing with family, you might be more flexible about things like rent payments and the rental rate, which can make the lending criteria more complex. This regulation falls under the purview of the Financial Conduct Authority. They want to ensure that you can afford the mortgage payments based on your personal income, without relying on the rental income from your family member or tenant. So, it’s essential to show that you can manage the repayments comfortably. If you would like to know more about buy to let mortgages, click here.

Can I rent my buy to let property to a relative?

Certainly! In simple terms, family buy-to-let mortgages allow you to rent your properties to your relatives, but they come with stricter rules with lenders. If you’re planning to rent to very close family members like parents, children, grandchildren, or siblings, you’ll likely need a regulated buy-to-let mortgage and the lender will make sure you can afford the monthly payments from your income as appose to assessing the rental income the property would generate.

However, if you’re renting to more distant relatives, such as cousins, aunties, or uncles, some lenders might consider this a bit differently and allow you to apply for a standard buy-to-let mortgage. It’s wise to be upfront about this information when you apply for a mortgage to avoid breaching your mortgage contract, which could lead to consequences. So, it’s wise to consult with a mortgage broker to find the most suitable mortgage rates based on your specific situation.

Speak To Hemal

I have successfully assisted hundreds of people get their dream mortgage. With many years of experience as a Mortgage Broker. I have come across all types of clients who have trusted me to guide them through what can feel like a daunting process. I provide and lead my clients through this entire process with a precise, attention to every detail, in an effort to make sure their mortgage plans are being met with clarity and proficiency.

How much can I borrow on a family buy to let mortgage?

Unlike regular buy-to-let mortgages, family buy-to-let mortgages focus on your income rather than rental income to determine if you can afford the mortgage. 

It’s essential to be aware of the tax implications when buying a family buy-to-let property. Since it’s considered a second property, you may have to pay an additional stamp duty surcharge on the purchase. Depending on your situation, there could be other tax charges, so it’s a good idea to consult with a tax professional before choosing a mortgage product.

Am I eligible for a family buy to let mortgage?

Figuring out if you qualify for a family buy-to-let mortgage can vary from lender to lender. It’s a good idea to reach out to a mortgage broker first to explore your options. In general, you’re likely to be eligible if you’re renting out a residential property to a close family member and can comfortably cover the mortgage payments without relying solely on the rental income. The lender will most likely assess your personal income to make sure you can afford your own home and expenses plus the buy to let mortgage rented to a family member. 

How can we help?

Over the years we have helped many individuals and families secure a mortgage. We provide advice and recommendations according to your circumstances when obtaining a mortgage. Our advisors assess your circumstances and then advise and recommend according to your needs.

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About the author

Hemal is an expert in mortgages and has successfully helped many people buy and remortgage their properties by fully assessing your needs and making advice and recommendation that suits your circumstances.
Hemal started the business during the pandemic and put customer service and expert advice at the forefront. Hemal has had media publications like BBC news, BBC radio and other media sources.
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