If I have a Current Account Mortgage (CAM) residential mortgage, and a
buy-to-let mortgage (at a higher rate BTL rate), if I pay off my
residential mortgage fully, will the rate on the BTL mortgage drop to
ordinary residential rates?
My CAM mortgage is paying off very quickly, and could conceivably be
paid off in the next couple of years.
Correct. The higher rate on the BTL reflects the perceived greater
risk to the lender. It is not some kind of "penalty" or lack of
discount given to non-BTL borrowers. For instance you could have
a residential mortgage for your main home and another one for a
second home (e.g. holiday cottage), and provided you rent neither
of them out, they can both be at the cheaper interest rate.