What is a buy to let mortgage

You need a buy to let mortgage if you’re buying a property that you plan to rent out.

You may also need to switch to a buy to let mortgage if you want to rent out your current home. 

If you only want to rent out your home for just a certain amount of time, if you get a job abroad, for example, it might be possible to get ‘consent to let’ from your lender.

Consent to let

If you get consent to let from your lender you can rent out your home temporarily and you don’t have to switch to a buy to let mortgage.

Buy to let mortgages tend to be more expensive.

Get in touch with your lender if you’re thinking about renting out your home as you need their permission.

If you don’t have permission, you could be in breach of your mortgage contract, which could be seen as fraud.

Coronavirus and buy to let mortgages

It's harder to get a buy to let mortgage at the moment because of the coronavirus.

Lenders have been concerned about the increased risk of tenants not paying their rent and house prices falling.

Some have left the buy to let market, while others have withdrawn certain buy to let deals.

However, the mortgage market can change quickly and some lenders are already starting to reintroduce deals.

Speak to a broker to find out which lenders are still offering buy to let mortgages.

How do buy to let mortgages work

Buy to let mortgages are different from normal residential mortgages.

The main differences are:

  • you normally have to put down a minimum 25% deposit

  • the interest rate will probably be higher

  • the fee lenders charge to get one is usually higher

  • most are interest only mortgages

  • financial protection

Interest only mortgages

Lenders let you sell the property to pay off the loan if you have an interest only buy to let mortgage.

Most lenders don’t let you do that with a residential interest only mortgage.

See below for more about interest only buy to let mortgages.

Financial protection

Buy to let mortgages given to landlords who invest in property aren’t regulated by the Financial Conduct Authority (FCA).

But if you’re an 'accidental landlord', your mortgage will be regulated by the FCA.

You’re an accidental landlord if, for example, you’ve:

  • inherited a property

  • moved in with your partner

  • rented out your property short term

If your mortgage is covered by the FCA you’ll have more financial protection, such as being able to use the Financial Services Compensation Scheme.

Types of buy to let mortgage

If you take out a buy to let mortgage there are 3 products you can choose from.

Fixed rate mortgage

A fixed rate mortgage lets you fix your mortgage rate from between 2 to 15 years.

Your repayments will stay the same during that time.

Often, the longer you fix your rate for, the higher your interest rate will be.

See our fixed rate mortgage guide to find out more.

Discount variable rate mortgage

Discounted variable rate mortgages are linked to your lender's standard variable rate (SVR).

The rate is discounted for some time, usually between 2 and 5 years.

These mortgages usually have the lowest interest rates and lowest monthly repayments.

Your monthly repayments can go up or down.

Tracker mortgage

Tracker mortgages follow the Bank of England’s interest rate and are often a certain percentage above it.

Your monthly repayments can go up or down.

How much deposit for a buy to let

You normally need a minimum deposit of 25% for a buy to let mortgage.

Some high street lenders will let you put down 20% and some specialist lenders 15%.

Deposits are higher for buy to let mortgages as lenders tend to think the loan is riskier than for a residential mortgage.

There may be times when the property is unlet, for example, or the tenants don’t pay the rent.

The bigger the deposit the better

There are drawbacks to mortgage products that let you put down a deposit as low as 15%.

These include:

  • very few lenders offer them, so the rates won’t be as good

  • you already have to be a landlord

It’s a good idea to put down as big a deposit as you can afford as the higher the deposit you put down the better rate you’ll get.

Speak to a broker about your financial situation. They’ll let you know which buy to let mortgage would suit you best.

How to get a buy to let deposit

There are a number of ways that you could get a buy to let deposit, such as remortgaging your current home to release some of the equity.

Equity is the value of your home minus the amount you still owe on it.

See our remortgage guide and our house deposit guide to find out more.

How much can I borrow with a buy to let mortgage

How much you can borrow with a buy to let mortgage depends on how much rental income you expect to get.

Many lenders ask for a minimum rental income of £25,000, while some don’t ask for a minimum at all.

You often need a monthly rental income of 25-45% more than your monthly mortgage repayments.

If you’re a first time buyer, it’s likely that a lender will take into account your gross salary when you apply for a buy to let mortgage.

The minimum is normally around £25,000.

See below for more information about buy to let mortgages for first time buyers.

Buy to let mortgage calculator

A buy to let mortgage calculator works out how much you might be able to borrow based on your rental income.

Some buy to let mortgage calculators will also tell you the monthly income you can expect to get from a buy to let property.

To use one you’ll need to know:

  • your rental income 

  • how much the property is worth

How are buy to let mortgages calculated

Most lenders will insist that your rental income is within 125% to 145% of your monthly buy to let mortgage repayments.

This is so they can be sure you’ll be able to afford the repayments.

For example, if your mortgage repayments come to £500 a month, you'll need to have a monthly rental income of at least £725 if a lender asks for 145%.

How much mortgage can I afford for a buy to let

Bear in mind all the expenses when working out how much mortgage you can afford for a buy to let.

These include:

  • tax on your rental income

  • landlord’s insurance

  • rent insurance

  • letting agent fees

Read our mortgages guide to find out what other fees you may have to pay.

Our best interest only buy to let deals this week

These deals are based on a:

  • £170,250 mortgage

  • £227,000 property

  • 25 year term

We’ve looked for the best deals based on their true cost.

This includes:

  • interest

  • fees

  • incentives

2 year fixed deal


True cost over initial period


Monthly payment


Based on getting a mortgage of £170,250 over 25 years with NatWest. Includes a £995 upfront fee and £250 cashback. 1.74% initial rate reverts to 4.09% SVR after initial 26 month period, costing £580.27 per month for 274 months. That's a 4.50% APRC. True cost based on a 24 month period. This deal was last updated on 28 July 2020.

5 year fixed deal


True cost over initial period


Monthly payment


Based on getting a mortgage of £170,250 over 25 years with BM Solutions. Includes a £1,995 upfront fee and £300 valuation fee. 1.92% initial rate reverts to 4.44% SVR after initial 63 month period, costing £629.93 per month for 237 months. That's a 4.3% APRC. True cost based on a 60 month period. This deal was last updated on 28 July 2020.

Is buy to let worth it

Whether buy to let is worth it depends on a number of things.

Two of the most important are:

  • how much money you’ll make

  • how much time you’ve got

There have been important changes to buy to let tax rules over the last few years which could affect how much you’d earn when you rent out a home.

One of the biggest is that if you buy a second home you now have to pay a 3% higher rate of stamp duty.

Some tax reliefs have also been changed.

These include:

  • the money you could reclaim replacing items in the home

  • interest paid on any buy to let mortgage used to buy the home

The changes have meant that some buy to let investors have found it more difficult to make a profit and decided to sell either part or all of their portfolio.

1 in 4 landlords were looking to sell at least one property over the next 12 months, according to a study.¹

Changes to buy to let tax rules

Changes to buy to let tax rules will be fully in place from 6th April 2020.

From then you won’t be able to deduct any of your mortgage payments from your rental income before paying tax.

Instead, the entire sum of your interest payment will qualify for 20% tax relief.

For allowable expenses to get tax relief they must have been incurred by you wholly and exclusively for the letting business, such as paying a plumber to repair a faulty boiler.

They can’t be capital expenditure such as adding something to the property that wasn’t there before.

This includes improving or upgrading something that increases the property’s value.

These costs should be deducted from capital gains when the property's sold.

But if the kitchen being fitted is like for like, for example, you can set the cost against your rental income.

Even when an expense isn’t capital expenditure, to qualify as an allowable expense, it will need to be either:

  • repairs and maintenance

  • replacement of domestic items

Repairs and maintenance

Repairs and maintenance applies either to items in the property or to the property itself, on a like for like basis.

  • You can’t claim for repairs that have been covered by insurance.

  • You can claim for excess amounts or parts of the repair work that you’ve had to pay for yourself.

Replacement of domestic items

With replacement of domestic items the initial purchases of furnishings and equipment for the property aren’t allowed.

Their replacement (of a similar standard or value) is.

This includes movable furniture, furnishings, household appliances and kitchenware.

Some landlords are still confident

While some property investors want to sell, others are expanding their portfolios.

A 2019 survey of 19,000 landlords found that:

  • 73% thought property is the best, least volatile long term investment

  • 83% said they were either unlikely or very unlikely to sell a property over the next year

  • 58% said they intended to stay put for the next five years²

Buy to let mortgage rates have fallen in the last few years, which has helped some landlords make a good return.

How to make money from a buy to let

You could earn money from a buy to let in a couple of ways:

  • your property could go up in value

  • you could get more rent as rates rise locally

You should think about which is more important for you as it'll affect what type of property you buy and where.

For example...

  • If you want to make more money in the long term, consider buying in an area where house prices haven’t just risen.

  • If you’re more interested in making money now, choose somewhere where there’s a high demand for rental homes, such as near a university.

You could consider regions in the UK that have seen a fall in house prices.

Prices in East of England were down 0.7% in November 2019 compared to the same time the previous year, according to the Office for National Statistics.³ 

And if you buy a property from a landlord, you’ll know what to expect to make in rent each month. You could even buy somewhere with existing tenants in place.

How to find a buy to let mortgage

A good way to find a buy to let mortgage is through a broker.

This is because some of the best buy to let mortgages are offered by lenders who don’t lend directly to borrowers.

You can only get those rates if you go through a broker.

Trussle is fee free and has access to around 12,000 mortgage deals.

Buy to let mortgage providers

Major lenders like Barclays and NatWest offer buy to let mortgages.

You can also get them from smaller lenders, such as Bluestone, Kensington and Kent Reliance.

Some smaller lenders have less strict rules about how much you can borrow.

You may have to pay an early repayment charge to your existing lender if you remortgage.

How many buy to let mortgages can I have

How many buy to let mortgages you can have depends on the lender.

Some won’t lend to portfolio landlords – people with 4 or more buy to let mortgaged properties.

Many of the big buy to let lenders set a limit of around 3 to 5 mortgaged properties or a maximum amount of borrowing with them.

Some lenders even set limits on the number of buy to let mortgages you can have with other lenders.

Speak to a mortgage broker about which lender would be best for you.

Should I set up a company for buy to let

Whether you should set up a company for your buy to let depends firstly on how many properties you want to rent out.

The advantage of having a limited company is that you won’t be affected by the changes in buy to let tax rules.

Setting up a buy to let limited company can be quite difficult and expensive, so it probably wouldn’t be worth it if you only plan to rent out one property.

And if you’ve got more than one, it still might not be a good idea financially.

Interest rates can be higher if you buy a buy to let through a limited company.

Speak to a tax adviser about what’s best for your situation.

Interest only buy to let mortgages

With most buy to let mortgages you can choose to only pay the interest each month.

This is called an interest only mortgage.

With most mortgages you pay both interest and some of the loan each month.

You’ll probably have to pay a higher interest rate with an interest only mortgage, but your monthly payments should be much lower.

You’ll need a plan in place to pay off the loan at the end of your mortgage. 

This could be:

  • selling the property

  • investments

  • an endowment

  • taking out another mortgage

Read our interest only mortgage guide to find out more.

First time buyer buy to let mortgages

There aren’t many buy to let mortgages available for first time buyers.

And some lenders won’t give you a buy to let mortgage if you're a first time buyer.

Those that do are likely to take into account your gross salary when you apply for a mortgage.

The minimum is normally around £25,000 and the lender will have certain rules.

You won’t need to pay the 3% stamp duty surcharge for investors and second homebuyers as you don’t already own a home.

But you won’t be able to get a first time buyer stamp duty discount

This is because you won’t be living in the property.

All mortgage guides, calculators and deals


¹ Residential Landlords Association, Renting Housing Crisis As Landlords Sell Up

² Benham & Reeves Landlords Survey 05.07.19

³ National Statistics UK House Price Index summary: November 2019

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