Residential investment property mortgages for individual landlords and portfolio investors, with products tailored to your investment strategy.
Buy-to-let mortgages are specialist property loans designed for landlords purchasing residential properties to rent out to tenants. Unlike standard residential mortgages, BTL lending is assessed primarily on the rental income the property generates rather than the borrower's personal earnings, making them accessible to investors regardless of employment status.
The UK buy-to-let market has evolved significantly following regulatory changes, with lenders applying stricter affordability tests and portfolio landlord rules. However, opportunities remain strong for well-prepared investors who understand the lending landscape and structure their investments appropriately.
Whether buying your first rental property or expanding a portfolio of dozens, understanding how BTL mortgages work is essential for maximising returns. From stress testing to limited company structures, ICR calculations to portfolio landlord rules, this guide covers everything you need to know.
Lenders require rental income to cover mortgage payments by 125-145%, calculated at a "stressed" rate (typically 5.5%+). Higher rate taxpayers often face 145% requirement.
Since 2017, lenders stress test at elevated rates to ensure landlords withstand rate rises. This affects maximum borrowing regardless of actual rate secured.
Personal ownership is simpler but mortgage interest relief is restricted. Limited company (SPV) ownership allows full interest deduction against corporation tax—more tax-efficient for higher-rate taxpayers.
Understanding the right scenarios ensures you're using this finance type strategically.
Single let properties rented to one household under AST. Most common BTL type with widest lender choice and best rates.
For landlords with 4+ mortgaged properties. Requires full portfolio assessment but specialist lenders offer flexibility.
Properties held in SPV or trading company. Tax efficiency benefits for higher-rate taxpayers building portfolios.
Short-term holiday letting rather than AST. Specialist products with higher yield potential but seasonal income considerations.
| Cost Component | Typical Range | Notes |
|---|---|---|
| Deposit | 20-25%+ | Best rates at 40%+ |
| Stamp Duty (3% surcharge) | 3%+ above thresholds | Additional property surcharge |
| Mortgage Fees | £500 - £2,000 | Often added to loan |
| Legal & Survey | £1,500 - £3,000 | Standard conveyancing |
| Management Fee | 8-15% of rent | If using letting agent |
| Maintenance | 10% of rent | Prudent allowance |
Identify suitable investment property meeting yield requirements and your investment criteria.
Establish borrowing capacity based on expected rent and your circumstances.
Secure AIP from lender to strengthen your purchase position.
Submit full application with rental assessment and property details.
Complete purchase, set up tenancy, begin generating rental income.
| Aspect | Buy-to-Let | Alternative |
|---|---|---|
| Income Assessment | Based on rental income | Residential: personal income |
| Deposit Required | 20-25% minimum | Residential: 5-10% possible |
| Stress Testing | 5.5%+ stress rate | Residential: actual rate |
| Tax Treatment | Restricted interest relief | Owner-occupied: no rental income |
Most buy-to-let lenders require rental income to be 125-145% of the mortgage payment, calculated at a notional interest rate (typically 5.5-6%). This is called rental coverage or interest coverage ratio. For example, if your mortgage payment at the stress rate is £1,000, you'd need monthly rent of £1,250-£1,450. Portfolio landlords and higher rate taxpayers often face higher coverage requirements (up to 145%).
This depends on your tax position. Since 2017, tax relief on mortgage interest has been restricted for personal landlords, making limited company ownership more tax-efficient for higher rate taxpayers. However, limited company mortgages often have slightly higher rates and fees. For basic rate taxpayers or those with only 1-2 properties, personal ownership may be simpler. We recommend speaking with an accountant about your specific situation.
Yes, many lenders offer products for first-time landlords. You'll typically need a larger deposit (usually 25% minimum) and may face slightly higher rates. Some lenders also cap the property value or number of properties they'll finance for inexperienced landlords. Having homeowner experience and a strong credit history helps significantly. Certain property types (ex-council, studio flats) may be restricted for novice landlords.
The PRA defines a portfolio landlord as someone with four or more mortgaged buy-to-let properties. Portfolio landlords face additional underwriting scrutiny, with lenders assessing your entire property portfolio, not just the individual application. You may need to provide full portfolio details, rental income evidence, and stress testing across all properties. However, specialist portfolio lenders offer better service and more flexibility for experienced investors.
Minimum 20-25%, compared to 5-10% for residential. Best rates at 40%+ deposits (60% LTV or lower). HMOs and multi-units often require 25-30%. Some lenders offer 80% LTV but with stricter ICR requirements.
Yes, but options are more limited. Some lenders exclude first-time buyers from BTL. You won't benefit from FTB stamp duty relief and will pay the 3% surcharge. Having 25%+ deposit and clear investment rationale improves chances.
Depends on tax position. Personal ownership is simpler but interest relief restricted to basic rate. Limited company allows full interest deduction against corporation tax. Higher-rate taxpayers building portfolios typically favour company; basic rate taxpayers with 1-2 properties often stay personal.
You become a "portfolio landlord" with enhanced underwriting. Lenders assess your entire portfolio's stress-tested affordability. You need full details of all properties. Specialist portfolio lenders often offer better terms for experienced investors.
Dedicated buy-to-let specialists with deep market knowledge.
Access to an extensive panel of specialist lenders.
Adhering to strict professional and ethical standards.
Proven track record in property finance.
Our local specialists understand the property market in your region and can provide tailored advice.
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