Written by 10:00 am Buy to Let Mortgages, Buying, Finance, Mortgages

Navigating Buy-to-Let Mortgages: A Comprehensive Guide

A buy to let mortgage is when you take out a mortgage on a property that you intend to rent to tenants for a profit.

Buy To Let Mortgages often often have higher interest rates than a typical mortgage and you will need to put down a larger deposit too – usually around 25%

Do you NEED a buy to let mortgage if you want to rent out your property?

Yes. Whether you’re buying an entirely new property to rent or moving house and wanting to rent out your old home, you will need a buy to let mortgage.

The only time you won’t need a buy to let mortgage is when you can pay off the property entirely and don’t need a mortgage at all.

As you won’t be living in the property, the mortgage will be assessed differently. Instead of largely being based on your income (like a residential mortgage), it will be assessed based on the profit you can potentially generate based on the rent. 

If you plan to rent out your property, you need to inform your lender or you could be breaching your contract. If you used a mortgage broker, contact them for advice. 

Main differences between a residential mortgage and buy to let mortgage

  • Interest rates. These are higher than for standard residential mortgages.
  • Deposit. Again, lenders will often require a higher deposit than for a residential mortgage. Although there are some 80% LTV buy to let mortgages, you will usually need a 25% deposit. 
  • Lending criteria. As mentioned, it will be based mainly on the profit you can generate through renting out the property, rather than your own income. Lenders will apply a rent to interest (RTI) cover calculation and require that rental income is 120%-130% of the mortgage repayment.
  • Repayment type. With Buy To Let Mortgages you have the option to arrange it on an Interest Only basis. This keeps your monthly payments low, but the balance does not reduce throughout the mortgage term and needs to be repaid in full once the mortgage ends. 

Can I get a buy to let mortgage?

In most cases, lenders will have certain criteria for granting buy to let mortgages. These can include:

  • Homeowner. It is usually easier to get a buy to let mortgage if you already have paid or are paying a residential mortgage.
  • Credit score. Lenders will prefer to lend to applicants with a good credit score.
  • Income. Some lenders will not lend to anyone earning less than £20,000 – £25,000 per year.
  • Your age. Some lenders may have upper age limits of around 70 or 75.

Tips for getting a buy to let mortgage

If you’re interested in investing property and want to get a buy to let mortgage, here are some of our top tips.

  • Be prepared for risk. Any kind of financial investment has its risks and this is no different. As you’ll be relying on rent to make your repayments, you have to be prepared for any void periods. You will also have to account for any repairs that need to be made to the property.
  • Be wary of rates. Part of the risk is also the housing market itself. Be aware that it will fluctuate and rates may rise.
  • Do your research. Use our mortgage calculator to make projections and find out key details, such as how much of a deposit you will need.
  • Talk to a professional. We strongly advise seeking advice from a professional when it comes to buy to let mortgages. A good mortgage broker will not only be able to find you the best deals but will be able to give you the right advice according to your circumstance. 

Call our mortgage team on 028 9099 9999 or email mortgages@propertypal.com


PropertyPal Mortgages Ltd, registered in Northern Ireland at Unit 2D, Jennymount Business Park, North Derby Street, Belfast, BT15 3HN (NI632933). PropertyPal Mortgages Ltd is an Appointed Representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading name of First Complete Ltd which is authorised and regulated by the Financial Conduct Authority for mortgages, protection insurance and general insurance products. The Financial Conduct Authority does not regulate some forms of Buy to Let.

PropertyPal Mortgages Ltd and First Complete Ltd are not responsible for Estate Agency or Legal services.

The guidance and/or advice contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at consumers based in the UK.

(Visited 34 times, 1 visits today)

Last modified: 04/12/2023