Last reviewed on 10th August 2023 by Martin Alexander (Mortgage Advisor)

Lenders will approve buy to let mortgages for first-time buyers, but only under certain circumstances. As a result, finding suitable lenders on your own can be difficult. Applying with lenders that aren’t suitable can result in you being declined, which can also damage your credit score.

As a first-time buyer, you’ll need a careful approach to applying for a buy to let mortgage. For this reason, we’d highly recommend having an advisor on board. Our specialists can find you a suitable lender and clarify anything you don’t quite understand.

Can a first-time buyer get a buy to let mortgage?

Yes, first-time buyers are able to get buy to let mortgages. That being said, lenders will view you as high-risk, as you’ve yet to own a property. It’s also important to note that not every lender will accept first-time buyers, as they’ll only offer buy to let mortgages to existing homeowners.

Typically, a first-time buyer will purchase their own home before becoming a landlord. Once you’ve got your first mortgage, getting a buy to let mortgage can become easier. This is because lenders can assess whether or not payments have been made on time.

Is it a good idea?

Purchasing a buy to let property can be a great investment, but being a landlord holds a lot of responsibility. Having the experience of being a homeowner can provide you with invaluable insight into what you may encounter as a landlord.

On the other hand, you might not need a mortgage for a home, as you perhaps live with your parents or a partner. You may have inherited a property that you already rent to tenants and now want to grow your portfolio. No matter what the reason, investing in a buy to let property can provide you with a monthly income.

Becoming a landlord before you purchase your first home can give you experience in property. The income generated from your buy to let can also be used to help purchase your first home.

Can I move into my buy to let property?

You may want to purchase a buy to let and move into the property yourself after a few years. You can then switch your buy to let mortgage to a residential mortgage. It’s also possible to switch from a residential mortgage to a buy to let mortgage. Often enough, your current lender may be happy to do this, depending on how you’ve repaid your mortgage.

Read more: How to switch to a buy to let mortgage.

What criteria will I need for a buy to let mortgage?

Buy to let mortgage lenders each have varied criteria. Nonetheless, those that accept first-time buyers will require applicants to meet the following criteria:

• 25% deposit minimum
• Meet a minimum income and affordability check
• Employment check
• Minimum age of 21 or 25 with other lenders
• Credit history

Learn more: Buy to let mortgage criteria explained.

What documents will I need to apply?

Lenders will investigate your application further than usual due to you being a first-time buyer. As a result, the more information you can provide to support your application will help.

Lenders will often request the following documents:

• 3-6 months’ wage slips or accounts if self-employed
• Employment contract – If you’ve just started a new job
• Address history – This can include utility bills, tenancy agreements, or bank statements
• 3-6 months’ bank statements
• Landlord reference if you’ve rented within the last 12 months

You’ll also have to provide evidence of the potential rental income your buy to let can achieve. A valuation carried out by an ARLA-qualified letting agent or a qualified surveyor should be sufficient. Lenders request this as your rental income will need to be around 125-140% of your mortgage, depending on the lender you’ve applied with.

Should I get an interest-only or repayment mortgage?

Most landlords choose interest-only mortgages in comparison to repayment mortgages and it’s quite clear why. The mortgage payments for interest-only are low in contrast to repayment mortgages, as you’d only pay interest on the loan. With a repayment mortgage, you’d repay the loan in addition to the interest, resulting in a higher cost each month.

The main advantage of having a repayment mortgage is that you’d own the property outright once the mortgage has been fully repaid. The drawback of this is that monthly mortgage payments are higher, limiting your rental profits.

As a first-time buyer, each buy to let mortgage type is possible. The right mortgage type will depend largely on your investment goals.

Read more: What is an interest-only buy to let mortgage?

Buy to let mortgage rates for first-time buyers

Loan-to-value ratios (LTV) for first-time buyer mortgages are a lot lower when compared to buy to let mortgages. For instance, it’s possible to secure a residential mortgage on a 95% LTV, whereas buy to let mortgages usually start from 75% LTV. This is another major reason why becoming a homeowner can be easier than becoming a landlord.

If you want a buy to let mortgage rather than a home for yourself, be sure to consider the differences in costs and how each mortgage is structured. Securing an interest-only mortgage on a residential property is possible, but there aren’t many lenders that offer them.

How much deposit will I need?

The majority of buy to let mortgage lenders require borrowers to have at least a 25% deposit. As a first-time buyer applying for a buy to let mortgage, the deposit amount is likely to be higher, but not in every case.

How much can I borrow?

It’s important to note that lenders assess affordability for buy to let mortgages in a completely different manner to residential mortgages. Underwriters are highly focused on the rental income that a buy to let property can achieve. This is typically at the forefront of whether or not a buy to let mortgage is approved.

There are of course other factors, such as your credit score, but potential rental income is a huge factor in getting approved.

Use our buy to let mortgage calculator here.

What if I have bad credit?

If you have bad credit, getting a buy to let mortgage as a first-time buyer will be very difficult. Nonetheless, there are specialist lenders that may accept you. You may be required to put down a deposit higher than 25% and you may also have to pay higher fees than usual.

If your credit issues are related to missed payments, then you may even be approved without going to a specialist lender. On the other hand, if your credit problems are because of bankruptcy, for instance, you’ll struggle to get a mortgage. That said, no two credit reports are the same, so you’ll need to speak to an advisor to check what’s possible.

Some lenders won’t accept you at all depending on your credit issues, whereas others will be better suited. As a first-time buyer, you don’t want to risk damaging your credit score further, so applying with a suitable lender is a must.

Can I use a guarantor for a buy to let?

Using a guarantor is more commonly used for residential mortgages rather than buy to let. That being said, some lenders may consider the use of a guarantor, especially if your assessment falls just short of approval.

It’s important to understand that each lender has a unique mortgage assessment. One lender may approve a buy to let mortgage with a guarantor, whereas another lender may not require a guarantor. This is why having an advisor can be so valuable.

If you’re still in search of mortgage advice or have some unanswered questions, you can make an enquiry with an advisor.