MORTGAGES

Buy-to-let Mortgages

Turn property into a long-term investment

What is buy-to-let?

Buy-to-let (BTL) mortgages are used for purchasing residential properties to rent to tenants. They are similar to residential mortgages but differ in key aspects.

Eligibility and lending criteria

Many lenders offer BTL, but terms and costs differ. Some set minimum age (often 25+), minimum income (e.g., £25,000), and upper age limits at the end of the term (e.g., 70). Certain properties (new builds, ex-local authority, low-value, some flats) may face restrictions. Lenders may also limit how many BTL loans you can hold or your overall BTL borrowing.

Credit record

Your personal credit history matters. Adverse credit, CCJs, or missed payments may restrict your options.

Affordability

Lenders mainly evaluate rental income rather than salary. Typical requirement: rent of at least 125% of the monthly interest payment (for example, £1,250 rent for a £1,000 payment), verified independently. The margin helps cover void periods and repairs.

Deposit

A typical maximum LTV is 75%, requiring a 25% deposit. Larger deposits (e.g., 40%+) often qualify for better rates.

Interest rate

BTL is generally priced higher than residential properties because of perceived risk.

Fees and costs

Expect a valuation or survey (to assess condition, value, and achievable rent), conveyancing costs, stamp duty land tax, and lender fees (which can be higher than residential).

Mortgage types

Options usually include residential products, trackers, discounts, fixed rates, capped rates, and variable rates. Many investors opt for interest-only to maximise cash flow, repaying capital when the property is sold; others prefer fixed rates for payment certainty.