2025 Guide to Buy-To-Let Mortgages

Introduction

If you’re planning to invest in property to rent out, a buy-to-let mortgage (BTL) is a key part of your journey. While the criteria are stricter than for residential mortgages, first-time landlords can still access these loans with the right preparation.

In this guide, we’ll explain how buy-to-let mortgages work, outline the eligibility criteria, and explore the pros and cons of becoming a landlord.

Topics covered:

• What is a buy-to-let mortgage?

• How much deposit do I need?

• How much could I borrow?

• Eligibility criteria

• Affordability considerations

• How to apply for a buy-to-let mortgage

• Costs and fees involved

• Types of buy-to-let mortgage

• Typical interest rates

• Advantages and disadvantages

• Understanding rental returns and yields

• Rules landlords need to know

• Speak to a buy-to-let mortgage expert

What is a Buy-to-Let Mortgage?

A buy-to-let mortgage is a home loan specifically for purchasing properties that you intend to rent out. Regular residential mortgages usually prohibit renting without consent, making a BTL mortgage essential for aspiring landlords.

Buy-to-let mortgages in the UK differ from standard residential mortgages in several key ways:

• Interest-only options: Most BTL mortgages are interest-only, where landlords pay only the interest each month, often from rental income.

• Affordability assessment: Lenders assess affordability based on projected rental income. Typically, rental income must cover 125% to 145% of mortgage payments.

• Not regulated by the FCA: Unlike residential mortgages, most buy-to-let products fall outside the Financial Conduct Authority's (FCA) regulation.

• Higher rates and fees: BTL mortgages generally come with higher interest rates and fees compared to residential mortgages.

Did you know?
You could miss out on up to two-thirds of available buy-to-let mortgage deals without consulting a specialist mortgage broker.

For more in-depth information, check out our guide to buy-to-let repayment mortgages and how these products differ from interest-only options.

How Much Deposit Do I Need?

Most BTL lenders require a deposit of 20-25%, with a typical loan-to-value (LTV) ratio of 75-80%. Some lenders may approve a mortgage with as little as 15% deposit, but this is less common.

For example, if you’re buying a property worth £300,000, a 20% deposit would mean saving at least £60,000.

How Much Could You Borrow?

Mortgage lenders typically calculate your borrowing capacity based on the expected rental income. To be approved, this income usually needs to cover 125% to 145% of your mortgage repayments.

Eligibility Criteria for Buy-to-Let Mortgages

While requirements vary by lender, common eligibility criteria include:

• Age: Most lenders require borrowers to be 21+, with an upper age limit of 75-80.

• Landlord Experience: Some lenders prefer experienced landlords, but first-time landlords may still find specialist lenders willing to approve them.

• Property Type: Unconventional properties (e.g., not built from bricks and mortar) may need specialist lenders.

• Income Requirements: Many lenders require a minimum personal income of £25,000, regardless of rental income.

• Credit History: A strong credit score improves your chances of securing competitive rates, but options exist for those with adverse credit.

Affordability Considerations for a Buy-to-Let Mortgage

In addition to your monthly repayments, other important financial factors include:

• Rental Income: Your loan approval depends heavily on your projected rental income. Check local rental listings or consult letting agents to estimate potential rent.

• Void Periods: Periods without tenants can affect your ability to meet mortgage payments. Ensure you have sufficient savings to cover any gaps.

• Maintenance Costs: Be prepared for unexpected repairs or maintenance that may not be covered by insurance.

• Legal and Survey Fees: You’ll need a solicitor for conveyancing and may also require a surveyor to check the property’s condition before purchase.

Speak to a Mortgage One Buy-to-Let Mortgage Expert

Whether you’re a first-time landlord or looking to expand your property portfolio, Mortgage One can provide expert advice and guide you through the buy-to-let mortgage process. Contact us today for personalised mortgage advice.