Buy-to-let mortgage guide

What is a buy-to-let mortgage?

Put simply, it’s a mortgage for buying a property to rent out. Instead of looking mainly at your salary, lenders base how much you can borrow on the expected rent, tested against the mortgage payment at a rate the lender sets. Buy-to-let mortgages can be interest-only or repayment, depending on the lender.

Most lenders want the monthly rent to cover the mortgage payment by 125% to 145%, worked out at a stress rate the lender sets. Some lenders also require a minimum level of personal income. Our buy-to-let mortgages page explains rental cover, top slicing, holiday lets and let to buy in more detail.

Here you’ll find answers to the more specific questions, such as letting to family, letting your current home and buying different types of property.

What do we need to know for a buy-to-let mortgage?

To find a lender whose criteria fit, we need to know about the property, the expected rent, your deposit, your own income and circumstances, any properties you already own, and whether you’re buying in your own name or through a limited company. Once we have the full picture, we can match you with lenders whose criteria fit.

Every lender has its own buy-to-let criteria, and which one suits you depends on your circumstances. Once we have the full picture, we look for lenders whose criteria fit your plans.

Can you get a buy-to-let mortgage to rent to a family member?

Yes, some lenders offer this. Where you or a close family member will live in the property, it’s known as a regulated buy-to-let mortgage, because it’s regulated by the Financial Conduct Authority. Lenders look at who will live there, the rent they’ll pay and your own circumstances, and each lender has its own criteria.

A close family member usually means a spouse or partner, parent, grandparent, sibling, child or grandchild. Because these mortgages are regulated, the lender carries out a fuller assessment of your affordability, in a similar way to a residential mortgage.

Criteria vary from lender to lender, so what suits you depends on your circumstances.

Can you rent out your home without a buy-to-let mortgage?

Yes, with your lender’s permission. Many lenders offer consent to let, which allows you to rent out a home that has a residential mortgage for a set period, often with a higher rate or a fee. Without permission, letting a property on a residential mortgage usually breaks the mortgage terms.

If you’re letting your current home and buying a new one to live in, this is known as let to buy. It usually involves moving your current home onto a buy-to-let mortgage and taking out a residential mortgage on your new home.

If you’ve become an accidental landlord, for example after inheriting a property or being unable to sell, consent to let or a move to a buy-to-let mortgage can both be options.

It all depends on the individual lender’s criteria and your circumstances.

Can you get a buy-to-let mortgage on any type of property?

It depends on the property and the lender. The type of property, its construction, its location and how it will be let all matter. Flats above shops, ex-local authority flats, new build flats, HMOs and multi-unit blocks are all assessed differently, and each lender has its own criteria for each property type.

Houses in multiple occupation (HMOs)

An HMO is a property let to three or more people from more than one household who share facilities such as a kitchen or bathroom. Key factors are the number of bedrooms and tenants, any licence the property needs from the local council, and your experience as a landlord.

Multi-unit blocks

A multi-unit freehold block is a building with several self-contained flats under one title. For multi-unit blocks, lenders consider the number of units, the rent from each and your experience.

What’s possible depends on the lender and your situation.

Can you get a buy-to-let mortgage if you’re retired?

Yes, a number of lenders work with retired landlords. Because buy-to-let lending is based mainly on the rent, they look at the expected rent, your pension or other income, your age and how long you want the mortgage to run. Each lender has its own criteria for age and personal income on buy-to-let.

Minimum personal income and maximum ages apply with some lenders, while others focus more on the rent. Knowing your circumstances means we can find the lenders whose criteria fit.

Which option suits you depends on your circumstances and the lender’s criteria.

Can you use equity in your home as a buy-to-let deposit?

Yes, this is common, subject to each lender's criteria. Homeowners can remortgage their own home, or take a further advance, to raise a deposit for a buy-to-let property. Affordability on both mortgages, the loan-to-value on your home and what the money is for are all assessed, and criteria vary.

Raising money from your home means your home is security for the extra borrowing. Our remortgage guide explains releasing equity in more detail.

Lending decisions depend on each lender’s individual criteria.

What costs do landlords pay when buying a buy-to-let?

On top of the deposit, landlords usually pay stamp duty at higher rates for additional properties, solicitor fees, a valuation or survey, and any lender arrangement fee. There can also be costs for safety certificates, licences and letting agent fees. Costs depend on the property, the lender and the firms you use.

What documents do you need for a buy-to-let mortgage?

Typical documents include photo ID, proof of address, proof of your personal income, recent bank statements and proof of your deposit. If you already own rental properties, lenders usually ask for a schedule of your properties, and for a remortgage, your tenancy agreement. Exact requirements depend on the lender.

How does getting a buy-to-let mortgage work, step by step?

Getting a buy-to-let mortgage usually follows six steps: talk through your plans with an adviser, check the expected rent against lenders’ rental cover, get a mortgage in principle, find a property and make an offer, make the full application with a valuation, then receive your mortgage offer and complete.

1. Talk through your plansA free call with Harry or Lois about the property, the rent, your deposit and whether you’re buying personally or through a company.
2. Check the rent against lenders’ criteriaWe look at how the expected rent works against each lender’s rental cover and stress rate.
3. Get a mortgage in principleA lender’s initial indication of what it could lend, so you can make offers with confidence.
4. Find a property and make an offerOnce your offer is accepted, we move to the full application.
5. Full application and valuationThe lender values the property, including the expected rent, and checks your documents.
6. Mortgage offer and completionYour mortgage offer is issued, the legal work is completed and the property is yours to let.

Buy-to-let questions, answered