Buy-to-let mortgages

A buy-to-let mortgage can help you to buy a property to rent out. Our guide will explain everything you need to know as a landlord.

Can I get a buy-to-let mortgage?

You’ll need a buy-to-let mortgage if you’re buying a property to rent out. To qualify for a BTL mortgage, you must meet the following criteria:

  • Be an existing homeowner. Most lenders require applicants to own a property before getting a buy-to-let mortgage.
  • Have a 25% deposit. Most BTL mortgages start at 75% loan-to-value (LTV), meaning you’ll need a 25% deposit.
  • Earning at least £25,000 per year will unlock most lenders. However, some lenders have no income requirements and will base their assessment on the rental value of your buy-to-let.
  • Your rental income must be at least 125% of your mortgage payments. Lenders will require evidence of this, such as rental prices in the area, to ensure the rent can pay your mortgage.
  • A good credit rating will make it easier to get a mortgage and unlock better rates. If your credit could be better, you’ll likely need a specialist lender with higher interest rates.
  • Your age can also be a factor. Some lenders have minimum and maximum age requirements, ranging from 21-75.

Lenders each have unique criteria, and some are stricter than others. Check each lender’s criteria before applying.

How do buy-to-let mortgages work?

Buy-to-let mortgages are for investment, so they work differently from residential mortgages.

Landlords typically use interest-only for buy-to-let to keep mortgage costs down. You’ll only pay the interest and not the mortgage, allowing you to retain more rent.

As you’re only paying interest on a mortgage each month, you’ll still have your entire mortgage balance left to pay when your term ends. Most investors repay the mortgage balance by selling the property or using a repayment vehicle.

How much can I borrow for a buy-to-let mortgage?

Affordability for a buy-to-let mortgage is assessed differently from residential mortgages. Since you’ll be earning income from the rent, lenders base the amount you can borrow on the property’s rental value.

How much deposit do I need for a buy-to-let mortgage?

Buy-to-let mortgages start at 75% LTV, so you’ll need a 25% deposit. For instance, you’d need a £25,000 deposit to buy a £100,000 property.

With buy-to-let (and most other mortgages), a larger deposit can unlock the best rates. A 40% deposit will give you the best rates and a better choice of lenders.

A few lenders may accept a 20% deposit, but you’ll be better off saving a bit more as you’ll have more lenders and better rates.

What interest rates can I get on a buy-to-let mortgage?

Your interest rate will depend on the quality of your application. Stronger applicants typically get the best deals. Factors that can influence your interest rates include:

  • Loan-to-value: The best buy-to-let mortgage rates start at 60% LTV. Lenders usually reserve their best deals for applicants using higher deposit amounts, as there’s less risk involved.
  • Credit history: A clean credit history will help you fly through credit checks and give you access to most lenders. A bad credit rating could lead to using a specialist lender with higher rates.
  • Fixed or variable rate: A fixed rate can give you security, but it’s typically higher than variable rates. Although variable rates are slightly lower, there’s always a risk your rate could go up if the Bank of England base rate changes.

What to consider before getting a buy-to-let mortgage

A buy-to-let mortgage is for property investment, so there are risks involved, which you’ll need to consider, such as:

  • Stamp duty – As an existing homeowner, you’ll pay stamp duty tax when buying a second property. Stamp duty can range from 3%-15% depending on the value of your BTL property, so you’ll need to factor this into your budget.
  • Tax changes – Earning an additional income from rent could change your tax bracket. Either way, you’ll pay income tax on rental income, which can involve submitting a self-assessment tax return each year. You’ll also have to think about capital gains tax (CGT) if you sell your BTL in the future.
  • Void periods – Although your rent will pay your mortgage, you’ll still need to prepare for times when you don’t have tenants. Always have capital aside to pay the mortgage when there’s no rent.
  • Letting agents – Using a letting agent to manage your property is something to consider. There’s a lot of legislation, such as protecting a tenant’s deposit and issuing the correct paperwork when a tenant moves in.

How can I get the best buy-to-let mortgage deal? 

Preparation before a mortgage is crucial, so here are a few tips to help you get the best buy-to-let deal:

  • Check your credit score before applying for a mortgage. You can get a copy of your credit report online, which can show you if there’s anything questionable. You can improve your credit score before applying if needed.
  • Compare deals across hundreds of lenders to find the best buy-to-let deal possible. You can use an advisor to do this for you.
  • Calculate fees as each deal is different. The best rates typically have expensive fees, so you’ll want to calculate the best deal overall.
  • Strengthen your application before applying. Minimise your debt and ensure the rental income comfortably exceeds 125% of your mortgage.

What does our expert say?

Take your time when selecting the right buy-to-let mortgage deal. Some mortgages are much cheaper than others and can save you hundreds each year. Also, consider the additional responsibilities of being a landlord, such as property maintenance, tax changes, and whether you can pay the mortgage during void periods.


Residential mortgages are for personal use, such as buying a home for yourself. Buy-to-let mortgages are for buying properties to rent to tenants.

Buy-to-let mortgages are typically interest-only, whereas residential mortgages are on a repayment basis. You can also get a residential mortgage with a 5% deposit, but you’d need a 25% deposit for a buy-to-let mortgage.

Yes, interest rates are higher for buy-to-let when compared to residential mortgages. Property investment is a risk, so lenders compensate for the risk in lending by charging higher rates.

With buy-to-let, most landlords depend on rental income to pay their mortgage. There’s also the risk of void periods and unexpected maintenance costs, which makes buy-to-let riskier.

You can get a buy-to-let mortgage with poor credit but will likely pay higher rates and fees, affecting your rental income and monthly cash flow. 

Waiting for a mortgage may be better if you’ve had credit issues in the past 12 months. Any credit issues older than two years won’t affect your mortgage rates as much, but you’ll still have fewer lenders to apply with.

Each lender varies, as some don’t have any limits on the number of mortgages you can have, whereas others do.

Some lenders also offer portfolio mortgages to landlords with four or more investment properties. There’s typically no limit on buying more property with a portfolio mortgage, as you can leverage equity in other properties to buy more.

Learn more: What is a portfolio mortgage?

As buy-to-let is mainly on an interest-only basis, you’ll still have the mortgage balance to pay at the end of your term.

A popular option is to sell the buy-to-let to repay the mortgage. Still, there are no guarantees the property value will be high enough when you decide to sell.

If property prices have increased, you can pay your mortgage in full and make a profit, which you can use for retirement or another buy-to-let deposit!

While you’ll be charged fees from your lender for a mortgage, you’ll also need to consider other fees from purchasing a buy-to-let, such as:

  • Solicitor fees
  • Stamp duty
  • Buildings insurance
  • Income tax
  • Property maintenance costs

There are also optional services, like letting agents or surveyors, if you plan on using them for your buy-to-let.