Buy to Let Mortgages UK

A buy-to-let mortgage is a loan for property you let to tenants rather than live in. Lenders size the loan on the rent the property earns — the rental cover test — rather than on your salary alone, deposits are larger than on residential lending, and most borrowers choose interest-only. Propertyze arranges buy-to-let mortgages across 135+ lenders, from first purchases to large portfolios.

This guide covers how the product differs from a residential mortgage, deposits, rental cover, fees, structure and tax — and where the specialist routes come in: portfolios, limited companies and HMO conversions.

Key facts at a glance

What it is: a mortgage on a property you let out. If you will live in it, the loan is residential; if not, it is a buy-to-let.
Deposit: usually 25% (a 75% loan); a few lenders go to 80% LTV at a higher cost, and a 40% deposit typically opens the keenest pricing.
The core test: lenders assess the loan on the interest coverage ratio (ICR) — expected rent against the mortgage interest at a stressed (notional) rate, not the pay rate. Common thresholds are around 125% for basic-rate and limited-company borrowers and around 145% for higher- and additional-rate taxpayers; these are typical conventions, not fixed rules.
Repayment type: interest-only is the overwhelming choice — it keeps payments down and suits an income-led investment.
Structure: personal name or limited company — the choice affects tax and which rental-cover threshold applies. Take tax advice on your own position.
Fees: budget roughly £400–£500 for a valuation and around £1,000 for legal costs in most cases; arrangement fees are commonly 1–2% of the loan.
Regulation: most buy-to-let mortgages are not regulated by the Financial Conduct Authority.

To test a rent against the cover thresholds, use our buy-to-let rental cover (ICR) calculator.

How a buy-to-let differs from a residential mortgage

The dividing line is occupation: if you will live in the property, the mortgage is residential; if you will let it, it is a buy-to-let. From that one difference flow the others — a distinct lender pool, different rates and fee structures, and affordability tested on the property's rental income rather than your payslip. Most buy-to-let borrowing is also interest-only, where residential lending is normally repayment.

Deposits and loan-to-value

For most borrowers the working figure is a 25% deposit against a 75% loan. Higher-leverage products exist — a few lenders currently lend to 80% LTV at a noticeably higher cost, and 85% products have appeared in the past at prices that made them rare choices. Push the other way and pricing improves: a 40% deposit typically unlocks the keenest rates. The deposit also interacts with the rental-cover test below — a smaller loan is easier for the rent to support.

Rental cover (ICR) explained

Lenders do not lend pound-for-pound against rent. If the mortgage interest is £1,000 a month, the lender wants more than £1,000 of rent — typically at least 125% — so there is a surplus for repairs, voids and the unexpected. In that example, around £1,250 of monthly rent supports a £1,000 interest bill.

Two details decide most marginal cases. First, the test is run not at the rate you pay but at a stressed (notional) rate — higher than the pay rate on shorter products, while a five-year (or longer) fix is often stressed more leniently, sometimes at or near the pay rate. Second, the threshold moves with your tax position: around 125% for basic-rate taxpayers and limited companies, around 145% for higher- and additional-rate taxpayers. These are typical conventions, not fixed rules, and they vary by lender.

Where rent alone falls short, top-slicing lets some lenders count surplus personal or portfolio income, and product structure can help too — see fees below. Lower-yielding markets feel this test hardest; our London buy-to-let guide covers that squeeze in detail. To test your own numbers, use the rental cover (ICR) calculator.

Fees and costs

Expect a valuation fee scaled to the property's value — budgeting £400–£500 covers most cases — and legal costs of around £1,000 in most scenarios, depending on whether one solicitor acts for you and the lender or you instruct your own. Arrangement fees have shifted from flat charges to percentages: 1–2% of the loan is common. All fees are set out before you start an application.

One structural quirk is worth understanding rather than fearing: products that pair a much higher fee — sometimes around 7% — with a much lower rate. Because the rental-cover test is run against the interest rate, a lower-rate, higher-fee product can pass affordability where a standard product fails; the total cost over the deal can be similar, with some of the interest effectively deferred into the fee. For low-yielding properties, particularly in the south and south-east, these products are often the practical route.

Interest-only or repayment

Interest-only dominates buy-to-let, for good reasons: monthly payments stay low, cash flow — the point of the investment for most landlords — improves, and in a company structure the interest can be offset against profit. Repayment buy-to-lets exist but are rare: higher monthly payments push the rental-cover bar up, and few lenders offer them.

Interest-only also fits long-term planning. Many landlords take the income now, hold life insurance to the value of the debt, and let the property's value grow around it — aiming to leave an unencumbered property to pass on. Whether that suits you depends on your goals; it is a conversation we have one-to-one, alongside professional tax advice.

Tax and ownership structure

From 2017, mortgage-interest relief for individual landlords was progressively restricted; it has been replaced by a tax credit at the basic rate. For higher- and additional-rate taxpayers that makes personally-held rental income materially less efficient than it once was, which is one reason limited-company buy-to-let — often through an SPV — has become so common: a company deducts mortgage interest as a business expense, and lenders typically apply the lower (around 125%) rental-cover threshold to company borrowers. The right structure depends on your circumstances; we are brokers, not accountants — take proper tax advice.

Who can get a buy-to-let mortgage

The criteria are wider than most people expect: broadly, any UK adult can be considered. First-time landlords — including first-time buyers — can qualify with the right lender, expats and foreign nationals have their own routes, and imperfect credit narrows the choice rather than closing the door. The specifics decide the shortlist: a first-time landlord with a small deposit fits a handful of lenders, while a large deposit widens the field. Placement — knowing who will take which case — is most of the value a specialist broker adds.

Property and tenant types

Standard single lets have the broadest lender market. HMOs — houses in multiple occupation — and multi-unit freehold blocks (MUFBs), such as a house converted into two flats, sit with a different set of lenders and products, often at different pricing. Provided the valuer confirms the property is saleable, marketable and lettable, little else restricts a standard case.

Tenant type shapes both yield and risk. Student lets put more people in a property for more rent, with more wear; professionals and families tend to stay longer and look after the place; letting to vulnerable tenants is a specialist niche where lender choice and case presentation decide whether the case completes. There are no general government schemes for buy-to-let investors — support has focused on owner-occupiers — though grants occasionally exist for energy improvements.

Growing a portfolio

There are two common routes to the next purchase: remortgage an existing property to release equity, or let rental surpluses build until the next deposit is ready. Neither is right or wrong — it is a risk-appetite decision. Once you hold four or more mortgaged buy-to-lets, lenders treat you as a portfolio landlord and assess the whole portfolio; our portfolio mortgage page covers what changes. Before any of it, an agreement in principle confirms how much you can borrow and shows sellers you are ready.

Before you apply

Start with the business model, not the property: who your tenants will be, what type of property and where, and what the portfolio is for — a top-up income, or a full replacement for employment. Then pick an area you genuinely know; a property at the other end of the country, in a market you have never walked, is hard to judge and harder to manage. We sense-check properties against your model and tell you honestly when one does not fit.

If things go wrong

A missed mortgage payment is reported on your credit file and weighs on every future application — remortgages, new purchases, even unrelated credit — more heavily than most other missed bills. Arrears that cannot be brought up to date end, at worst, in repossession and a quick sale below market value, with the shortfall in equity yours to absorb. That is exactly why lenders insist on rental surpluses, and why we stress-test the business model with you: bad tenants and void months happen, and the structure should absorb them rather than break.

Frequently asked questions

What is a buy-to-let mortgage?

A buy-to-let mortgage is a loan for property you let to tenants rather than live in. Lenders size the loan on the rent the property earns — tested at a stressed rate with a surplus margin — rather than on your salary alone, and most borrowers choose interest-only.

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

Usually 25%, for a 75% loan-to-value mortgage. A few lenders go to 80% LTV at a higher cost, and a 40% deposit typically opens the keenest pricing.

How does rental cover (ICR) work?

Lenders test expected rent against the mortgage interest at a stressed (notional) rate, looking for around 125% cover for basic-rate and limited-company borrowers and around 145% for higher- and additional-rate taxpayers. On a £1,000-a-month interest bill at a 125% threshold, that means around £1,250 of monthly rent. Thresholds vary by lender and product.

What fees come with a buy-to-let mortgage?

Budget roughly £400–£500 for the valuation and around £1,000 for legal costs in most cases. Arrangement fees are commonly 1–2% of the loan, and some products trade a lower rate for a higher fee to help affordability. All fees are set out before you apply.

Should I choose interest-only or repayment on a buy-to-let?

Interest-only is the overwhelming choice: it keeps monthly payments down, suits an income-led investment and, in a company structure, the interest can be offset against profit. Repayment versions exist but few lenders offer them. The right answer depends on your goals — and on tax, take professional advice.

Is it better to hold a buy-to-let in a limited company?

It depends on your circumstances. Mortgage-interest relief for individual landlords has been replaced by a tax credit at the basic rate, while a company deducts interest as a business expense and is usually tested at the lower rental-cover threshold. There are also costs and complications — take proper tax advice before structuring.

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

Often, yes — first-time buyers who are also first-time landlords can qualify, though the lender list is shorter and the deposit matters more. Criteria are wide: UK adults, expats and borrowers with imperfect credit all have routes.

Does property management affect a buy-to-let mortgage?

Indirectly, and materially: the rent supports the loan, so tenant choice and good management protect the investment. If the property is not local to you — or you simply do not want the calls — a letting agent will manage it for a percentage of the rent.

What happens if I miss payments on a buy-to-let mortgage?

A missed mortgage payment is reported on your credit file and affects your ability to remortgage or borrow again — more severely than most other missed bills. If arrears build and cannot be brought up to date, the lender's last resort is repossession and sale, with any surplus returned to you.

Are there restrictions on property or tenant types?

HMOs (houses in multiple occupation) and multi-unit freehold blocks sit with a different set of lenders and products. Tenant types matter too — student lets carry higher yields and higher wear, and letting to vulnerable tenants is a niche where lender choice and case presentation are key.

Listen to the episode

Scott West discusses buy-to-let mortgages in more depth on the Propertyze podcast.

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Your property may be repossessed if you do not keep up repayments on a mortgage secured on it.

Most buy-to-let mortgages are not regulated by the Financial Conduct Authority.