Buy-to-Let Mortgages Explained
A practical guide to borrowing for a rental property: deposits, rental income, lender criteria and choosing between standard and specialist buy-to-let finance.
How Does a Buy-to-Let Mortgage Work?
A buy-to-let (BTL) mortgage is designed for buying or remortgaging a property that you intend to rent out. It is different from a residential mortgage because lenders normally assess the expected rental income alongside the property's value, condition and your circumstances.
Buy-to-let mortgages can be used for purchases and remortgages, with interest-only and repayment options. The cheapest advertised rate is not always the lowest-cost or most suitable product: fees, rental stress tests, maximum loan-to-value and property criteria can change the outcome.
Start with our current buy-to-let mortgage rates, or explore HMO mortgages and limited-company buy-to-let if your plans are more specialist.
Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority
How Much Deposit Do You Need for a Buy-to-Let Mortgage?
A 25% deposit is a common starting point for a standard buy-to-let purchase, giving a 75% loan-to-value (LTV) mortgage. Some lenders offer 80% LTV, and selected products may reach 85% LTV, subject to the property and applicant meeting their criteria.
For a £300,000 property, a 25% deposit is £75,000; a 20% deposit is £60,000; and a 15% deposit is £45,000. A larger deposit may increase lender choice and reduce borrowing costs, but rental affordability must still support the loan.
Compare products by 2-year fixed, 3-year fixed and 5-year fixed periods.
The rent can limit how much you borrow
Two lenders may offer similar rates but lend different amounts on the same property. The surveyor's rental valuation, interest coverage ratio and stress-test rate all matter.
How Much Can You Borrow on a Buy-to-Let Mortgage?
Most lenders calculate a rental affordability limit using an interest coverage ratio (ICR). This compares the monthly rent with an interest payment calculated using a lender's stress-test rate, which may be higher than the mortgage rate you actually pay.
Some standard buy-to-let assessments use 125% ICR, while others use 145%, 160% or different thresholds depending on tax status, ownership structure and product. The rules are lender-specific; a limited-company application does not automatically qualify for the lowest ICR.
Illustrative rental stress-test example
For a £200,000 interest-only loan stressed at 5%, the notional monthly interest is approximately £833. The rent required at different ICRs would be:
| ICR | Minimum monthly rent | Illustrative assessment |
|---|---|---|
| 125% | £1,042 | Some standard BTL cases |
| 145% | £1,208 | Some higher-rate taxpayer cases |
| 160% | £1,333 | Some lenders' higher ICR cases |
Illustration only: £200,000 × 5% × ICR ÷ 12, rounded to the nearest pound. These are not current lender quotes or universal lending rules.
A surveyor generally assesses the market rent, and some lenders may use a lower figure than the landlord expects. Rental income is not the only test: landlord experience, personal income, existing borrowing, property type and portfolio size can also matter.
Why the fixed-rate period can affect borrowing
Some lenders assess certain longer fixed-rate products using the product rate, subject to a minimum, while shorter fixed rates and trackers may face a higher stressed rate. The precise approach depends on lender policy, so the product with the lowest rate does not necessarily allow the largest loan.
Interest-Only or Repayment Buy-to-Let Mortgage?
With an interest-only mortgage, monthly payments cover interest rather than reducing the capital owed. This may help cash flow, but the full loan normally remains due at the end of the term and needs a credible repayment strategy. A repayment mortgage reduces the balance over time, although monthly payments are generally higher.
Landlords should allow for empty periods, maintenance, repairs, insurance, safety checks, management fees and tax. These costs can affect whether a property is a sustainable investment even when the mortgage passes the lender's rental calculation.
Buying a Rental Property or Remortgaging an Existing One
Buy-to-let mortgages can fund a purchase or replace an existing loan. A remortgage may be used to change products, release equity or review the borrowing structure, subject to valuation and affordability. Early repayment charges and fees may make switching less attractive during a current deal.
If you want to rent out a home that currently has a residential mortgage, contact your existing lender about consent to let or investigate a suitable buy-to-let remortgage before letting it. Permission and insurance arrangements matter.
See our buy-to-let remortgage rates and full buy-to-let mortgage search.
The property itself must meet lender criteria
A low mortgage rate is of little use if the lender will not accept the property. Condition, construction, occupancy, tenancy arrangements and the surveyor's rental valuation can all affect eligibility.
Does a Buy-to-Let Property Need to Be Ready to Let?
Many mainstream buy-to-let lenders expect the property to be suitable for letting when the mortgage completes, because their lending assessment is based partly on achievable rental income. A surveyor may identify essential repairs, missing facilities, safety issues or substantial disrepair that prevent a normal mortgage offer.
Some lenders can consider limited remedial works within a specified period, subject to their current criteria and the surveyor's assessment. If the property needs more work, refurbishment finance or bridging may be worth considering before a longer-term buy-to-let remortgage.
Short-term finance carries different costs and risks, including arrangement fees, interest, potential extension charges and the need for a viable exit. The proposed remortgage may depend on the completed works, final valuation and lender criteria at that time. We'll cover the distinctions between minor works, major refurbishment and HMO conversion in a dedicated property-condition guide.
Does the EPC Rating Affect Buy-to-Let Mortgage Rates?
A property's Energy Performance Certificate (EPC) rating can affect which buy-to-let mortgage deals are available. Some lenders offer slightly lower mortgage rates or cashback incentives for energy-efficient rental properties, commonly those rated EPC A or B. Certain lenders also include EPC C properties in their green mortgage offers.
These incentives are lender- and product-specific, and an improved EPC rating does not automatically guarantee a cheaper mortgage. When comparing buy-to-let deals, check the EPC eligibility alongside the interest rate, product fees, cashback and overall cost. A lender may also have separate minimum EPC requirements for the property.
Standard Buy-to-Let, HMO or Limited-Company Mortgage?
A standard single-household rental may qualify for a mainstream BTL product. Properties let to several unrelated occupants may need specialist HMO finance, although some smaller shared properties can qualify under standard BTL criteria. Tenancy agreements, occupancy, licensing and how the rent is valued all affect the choice.
A landlord can also buy through a limited company, commonly a property-investment SPV. Mortgage availability, guarantees, fees and rental affordability can differ from borrowing in a personal name. Ownership also has tax and legal consequences, so obtain appropriate independent advice.
Read our HMO mortgages explained, small HMO criteria and limited-company buy-to-let mortgage guide.
How to Compare Buy-to-Let Mortgage Deals
Compare the initial rate alongside the product fee, monthly payment, true cost over the initial period, follow-on rate and early repayment charges. A low headline rate with a high percentage fee can cost more than a slightly higher rate with a modest or no product fee.
Check the lender's rules for the proposed tenancy, property type, minimum income, landlord experience and rental coverage before assuming an advertised deal is available. Go Direct's mortgage comparison tools provide current rates, while our advisers can help assess lender criteria.
Explore Buy-to-Let Mortgages and Rates
Use the mortgage comparisons to explore current products, or choose a specialist guide if the property, ownership structure or intended works affect lender eligibility.
Compare buy-to-let mortgage rates
Specialist buy-to-let guides
Buy-to-Let Mortgage FAQs
What is a buy-to-let mortgage?
A buy-to-let mortgage is borrowing secured on a property intended to be rented to tenants. Lenders assess the expected rent, property and applicant against buy-to-let criteria.
How much deposit do I need for a buy-to-let mortgage?
A 25% deposit (75% LTV) is common, but some lenders may offer 80% or, in selected cases, 85% LTV. Eligibility and rates depend on the property and applicant.
How is buy-to-let borrowing calculated?
Lenders usually assess the rent against a stressed interest payment using an interest coverage ratio (ICR). The rental valuation, stress rate and ICR vary by lender and product.
Can I get an interest-only buy-to-let mortgage?
Yes. Interest-only is common in buy-to-let lending, but you remain responsible for repaying the capital at the end of the mortgage term.
Can I rent out my existing home?
You generally need permission from your current lender, often called consent to let, or an appropriate remortgage. Do not let a mortgaged home without checking the lender’s requirements.
Can I buy a rental property through a limited company?
Yes. Specialist limited-company buy-to-let products are available, often for property investment companies. Seek independent tax advice before deciding how to own a property.
Can I mortgage a property that needs refurbishment?
It depends on whether the property is acceptable security and suitable for letting at completion. Some lenders allow limited works; more substantial refurbishment may require specialist short-term finance.
Is an HMO covered by a standard buy-to-let mortgage?
Some small shared properties can qualify for standard buy-to-let products, while larger or more complex HMOs often need specialist lending. Occupancy, tenancy and rental valuation matter.
Your home may be repossessed if you do not keep up repayments on your mortgage