Buy-to-Let Mortgage FAQs

A buy-to-let mortgage is one that allows you to borrow money against a property that is let out to tenants, or due to be let out.

How much can I borrow with a Buy-to-Let Mortgage?

Buy-to-let mortgage lenders may lend up to 75–80% of a property's value. The amount they can lend is based primarily on the rental income of the property.

Can I have interest only on a Buy-to-Let Mortgage?

Yes. Most buy-to-let mortgage lenders will allow you to take the mortgage out on an interest-only basis as it is classed as an investment. This does mean you will need to have a plan in place to repay the loan at the end of the mortgage term — also called a 'repayment vehicle'.

How much deposit do I need for a Buy-to-Let Mortgage?

The minimum deposit required on a buy-to-let mortgage is at least 20–25% of the property's value. On top of that, you will also need to have funds to cover other costs, such as stamp duty and solicitor's fees.

Should I use a broker to apply for a Buy-to-Let Mortgage?

It depends on how complex your circumstances are and how well you know lender criteria. There are lots of extra things to consider — will the lender lend you enough based on the rental income? Will they accept the property type? Do they need a minimum personal income? A broker can find you the right lender first time.

Can I convert my home to a Buy-to-Let Mortgage and buy a new home?

Also called a 'let-to-buy'. This is usually acceptable with the right combination of lenders for both parts of the transaction. It's important to speak to both lenders before applying to make sure it fits their criteria.

What type of properties can a Buy-to-Let Mortgage be used on?

Buy-to-let mortgages can be used on most residential properties such as houses and flats, although certain property types can be more difficult — such as studio flats, HMOs, or ex-local authority properties.

Can I have a Buy-to-Let Mortgage if I'm a first-time buyer?

Yes, although it will be more difficult as lenders will want to make sure the property isn't a residential purchase being masked as buy-to-let. There are lenders who will consider this scenario.

FAQs

How is buy-to-let affordability assessed?

Primarily on the rental income. Lenders apply a rental stress test to ensure the rental income covers the mortgage payment by a set percentage, typically 125–145%.

Can I buy through a limited company?

Yes. Many landlords now use limited company structures for tax reasons. The mortgage process works differently, so speaking to a broker first is recommended.