Buy To Let Mortgages

Buy, remortgage or release equity from your investment properties

Expert advice

Talk to one of our Property Finance Specialists

Loan Amount

£100k-£5m

Loan Term

Up to 25 Years

Time to Funds

As Little as 45 days

Interest Rate

From 5%

Buy to let mortgages to help you build your investment portfolio

Investing in residential property can be one of the best ways to maximise your returns and build long-term value. By taking out a residential buy to let mortgage you can unlock equity from your existing portfolio for further investment, or use the loan to purchase new properties.

What is a buy to let mortgage?

A buy to let mortgage is a mortgage for property investors who are purchasing a residential property to let out. Properties can be houses, flats, HMOs or student accommodation. Buy to let mortgages can be taken out in personal names, or increasingly in Limited Companies for tax reasons.

The mortgage can be used to purchase the property, to refinance an existing mortgage, or to release equity from the property. You generally need a larger deposit than for home mortgages and the interest rates are normally higher. Typically buy to let mortgages aren’t regulated by the Financial Conduct Authority (FCA).

How does a buy to let mortgage work?

Like personal mortgages, buy to let mortgages tend to be quite long term. Typically, they span between three and 25 years.

Lenders will need to verify that you can afford to meet the monthly mortgage repayments, as well as meeting other specific criteria. Once approved, they’ll send a valuer out to confirm the value of the building and then their solicitors will set about the legal work.

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How much deposit do I need for a buy to let?

Buy to let mortgages require a hefty deposit, and that should be a major consideration before the mortgage hunt begins. The amount that you’ll need varies, depending on what the lender thinks you’ll be able to afford, and what type of property you’re hoping to buy.

Usually a buy to let deposit will need to be at least 25% of the overall purchase price. That means lenders can lend up to 75% loan to value (LTV). Of course, many property investors hope to pay the smallest possible deposit, so it’s well worth shopping around to establish the amount that different lenders are able to offer. In some cases you may be able to fund the entire purchase price by offering a second property as security to a lender.

Do I qualify for a buy to let mortgage?

Each lender has their own set of criteria that you must meet in order to be considered for a buy to let loan. The list of eligibility checks that lenders use to decide whether or not to lend include assessments of your experience, income and credit history. They’ll also assess the type of property you’re buying, the quality of tenant and how much rent you’ll get. For foreign nationals or non-UK residents the pool of applicable lenders will be different, so read our guide here.

Typically you’ll be eligible for a buy to let mortgage if:

You own your own home. If you own other investment properties then this is a real plus.
Your credit history is good.
You can demonstrate a personal income of £25k or more.
The rental income for the property covers interest-only repayments by at least 125%.

Recently completed Buy to Let Mortgages

How quickly can I get a buy to let mortgage?

Arranging a buy to let mortgage will take a similar amount of time to arranging your personal mortgage. The process involves gaining approval, instructing valuers, and then the conveyancing process with solicitors.

If you, your lender and your solicitor pull out all the stops and arrange everything as quickly and efficiently as you possibly can, you’ll likely be looking at a time frame of 6 to 8 weeks. Of course, more complex mortgages can often take far longer than this. If you need to move quicker than this you should consider a bridging loan.

Make sure everything runs smoothly by ensuring clear, fast communication with your lender, and keep all your paperwork to hand to help the process along. Using an experienced broker can really help to keep everyone moving and deal with any hiccups along the way.

How much does a buy to let mortgage cost?

A buy to let mortgage will usually come with an arrangement fee and an annual interest rate. You will also need to pay for a valuation fee and solicitor fees.

Typical lender costs may include:

Application fee: often added to the loan. Typically around 1.5%, but sometimes this can be as low as 1% or as high as 2%.

Interest rate: normally shown as an annual interest rate. Depending on the lender’s assessment of your risk rating, this often ranges from 2.5% to 6% per annum. You can normally opt for fixed rates for 2 years of 5 years, or variable rates (these are often a little cheaper, but could rise during the loan term).

Other fees: such as early repayment charges, and third party fees such as valuation fees. Always read the loan contract in detail.

Buy to let mortgage interest rates

Which lender has the best buy to let mortgage rates? It’s a simple question but the answer depends on your specific situation. Buy to let mortgage interest rates vary from lender to lender based on their view of your risk profile. Lenders have their own risk appetites and scorecards, but a helpful way to get an idea of what interest rate you could get is to think in terms of “risk bands”:

Risk band A: Rates between 2.5% - 3.5% per annum. Strong personal credit score, strong business credit score (if applicable), straight-forward property types, good quality private tenants on Assured Shorthold Tenancies (ASTs)
Risk band B: Rates between 3% - 4.5% per annum. Reasonable personal score with only minor issues, reasonable business credit score (if applicable), perhaps more complex property types including HMOs and multi-unit freehold blocks, tenants on Assured Shorthold Tenancies (ASTs).
Risk band C: Rates between 4% - 6% per annum. Some recent credit issues or weak credit score (missed payments or satisfied CCJs), complex property types that are difficult to lend against, complex tenants such as vulnerable tenants, more complex lease types such as corporate letting agreements.

Can I Get a Buy To Let Mortgage if I'm a Foreign National?

Non-UK residents and foreign nationals can qualify for buy to let mortgages, in personal names or in a company structure, but there are certain factors to consider before embarking on this investment journey. Mortgages are more complex and would be provided by specialist lenders. Read our guide for foreign national buy to let mortgages.

Can I Let My Property to Vulnerable Tenants?

Standard buy-to-let mortgages typically don’t accommodate long-term leases, as they are designed for assured shorthold tenancies (ASTs). Housing prividers such as Serco, Mears and Clearsprings who provide housing for vulnerable tenants require long-term leases.

Lenders base their terms, conditions, and risk profiles on this type of tenancy. To lease to a housing provider on a long-term basis, you’ll need a specialist mortgage product designed for this specific use.

Finding lenders willing to support this type of property leasing requires a thorough understanding of the lender market and their attitudes towards risk. While mainstream banks might decline your application, independent providers are often more receptive and can provide the necessary finance. Use a specialist finance broker like BIZL to help you secure financing for specialist property investment opportunities like this.

Read more about letting to Serco, Mears or Clearsprings here.

Need advice for a buy to let mortgage?

Talk to one of our Business Finance Specialists. We’re on hand to take you through the options available.