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Buy-to-let mortgages

Getting the right buy-to-let mortgage rate is really important.

Let our expert broker partner Mojo Mortgages compare deals from across the market to find the best one for you.

Compare buy-to-let mortgage rates from over 90 lenders across the whole of the market

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The FCA does not regulate mortgages on commercial or investment buy-to-let properties.

Happy couple signing paperwork

What is a buy-to-let mortgage?

A buy-to-let mortgage is used to purchase a property you plan to rent out to tenants for profit.

Some key differences with a standard residential mortgage are:

  • Buy-to-let mortgage deposit - the deposit requirement is larger, with 20-40% the typical range, and most lenders asking for at least 25%.

  • Loan calculation - borrowing is largely based on the rental income (or rental yield) possible from letting out the property. Some lenders may consider personal income alongside this.

  • Property use - you're unable to live in a property with a buy-to-let mortgage as the owner - even during the renovation period.

  • Financial protection - buy-to-let mortgages are not typically regulated by the Financial Conduct Authority (FCA) - unless they're specific regulated products.

Buy-to-let mortgage rates

The best buy-to-let mortgage rates will be available to those with the lowest loan to value (LTV). Or in other words, the largest deposit compared to the property value.

Another important factor is what's currently available on the market. Buy-to-let mortgage rates available are currently higher than those seen in the previous decade -so those remortgaging are likely to find that even the best rates are less competitive than they're used to.

Below we've highlighted the average vs. the cheapest buy-to-let mortgage rates currently available on a two-year fixed-rate deal.

Lender typeCurrent average rateCurrent lowest rate
Across all lenders6.49%*4.49%*
Big 6 lenders6.39%*6.03%*


Date Updated 21 September 2023

However, many landlords prefer variable-rate mortgage options - such as a tracker mortgage - as these can be cheaper than a fixed-rate at the outset. Speaking to a whole-of-market mortgage broker can help you find the best buy-to-let mortgage rate for your circumstances.

“There has been more interest in variable rates from buy-to-let investors, who are looking at the difference in price compared to a fixed-rate deal. When they consider how much rates would have to increase to justify opting for a fixed-rate deal, some believe it will be more cost-effective to choose a variable-rate. However, this is dependent on the borrower’s attitude to risk - for many a fixed deal will give them the peace of mind they prefer.”
Ron Ogbue, Mortgage Expert at Mojo Mortgages

How does a buy-to-let mortgage work?

Buy-to-let mortgages are generally offered on an interest-only mortgage basis, so only the interest is repaid each month - the capital (amount borrowed) is repaid at the end of the mortgage term. It’s possible to find buy-to-let mortgage deals with capital repayment terms, but these are less common.

With an interest-only mortgage you’ll need a repayment plan in place to cover the final sum repayment. Most landlords sell the rental property, but you can also use savings or investments, depending on the preferences of the specific lender.

Who is eligible for a buy-to-let mortgage?

Buy-to-let (BTL) mortgage criteria are more substantial than for a residential mortgage, and while they vary between lenders they typically include:

  • Minimum age: Usually 21-25.

  • Maximum age: This can be a little more flexible in the buy-to-let market but some lenders have a maximum age on application and/or by which you should have repaid the loan.

  • Home ownership status: Fewer lenders offer btl mortgages for first-time buyers, but they are available.

  • Minimum income: Not all lenders have one, but you may need to earn £25,000 or more to apply for some BTL products.

  • Deposit: Lenders usually require at least 25% of the purchase price, with portfolio landlords often being asked for larger deposits of around 40%.

  • Rental income: Borrowing is based on your rental yield and most lenders want the property to bring in at least 125% of the cost of the BTL mortgage repayments. For portfolio landlords it can be up to 145%. Many will want an ARLA registered letting agent to confirm the rental potential.

  • Property type: Not all lenders accept applications for HMO (house of multiple occupancy) properties or mixed use rentals, so you're likely to need a more specialist lender if you plan to venture into anything other than single let property.

  • Credit history: As with other mortgages, the better your score, the greater choice of providers and, therefore, the better rates of interest available to you.

What type of buy-to-let mortgage do I need?

There are a few different products for buy-to-let, depending on the type of landlord you are:

Standard buy-to-let

Sometimes referred to as a vanilla buy-to-let, this is for existing landlords or those intending to one - usually to let out single family homes on a secure tenancy basis.

This can either be as an individual, or as a limited company buy-to-let, which most businesses now operate through a specific special purpose vehicle (SPV). An SPV is a company that exists exclusively to manage the purchase, sale and letting of property for profit.

Family or regulated buy-to-let

A regulated buy-to-let mortgage is similar to a consumer buy-to-let, but it's used specifically to let property to close family members. It's often referred to as a family buy-to-let for this reason.

The purpose is not to turn a profit, and may be used when a spare or inherited property not being used by the owner is rented at market-rate to a close relative.

Consumer buy-to-let

A consumer buy-to-let is aimed at people who have become landlords as a matter of circumstance, rather than as an intentional career choice. They are regulated by the financial conduct authority (FCA), as they're not considered to be exclusively for commercial gain.

HMO mortgage

Although still used by professional landlords, not all lenders offer buy-to-let mortgages for HMO (house of multiple occupancy) properties. Sometimes a HMO mortgage is, therefore, referred to separately. It is a standard BTL mortgage, however there are typically more regulations to be aware of.

How much will my buy-to-let mortgage cost?

You'll have the same costs to consider as you would with any other mortgage, however, some of them are higher, given the commercial nature of buy-to-let mortgages:

  • Mortgage fees - the usual costs of taking out a mortgage, such as the arrangement fee, valuation and legal fees apply - these are often higher for commercial properties.

  • Deposit - 25-40% of the property value.

  • Monthly repayment - The cost will vary based on the value of your property, how much you borrowed and your interest rate. Buy-to-let mortgage rates vary depending on whether you opt for a fixed or variable rate deal and the how risky the lender determines your borrowing (usually based on the LTV, but the type of property can also be a factor).

  • Final capital repayment - Most buy-to-let mortgages are interest-only, so it's important to consider how you'll repay the capital (amount borrowed) at the end of the term. Some landlords save an element of their rental income, whereas others may sell the property or remortgage to pay back the debt.

  • Additional stamp duty - If you already own another property - including your own home and other rental properties you'll need to pay a second home surcharge on any additional property. In England and Northern Ireland this is 3% on top of standard stamp duty, in Scotland 6% on top of LBTT and in Wales, 4% on top of LTT .

If you purchase a buy-to-let property as a first-time buyer, you won't be eligible for the stamp duty relief that first-time buyers buying a residential property have.

Use our stamp duty calculator to find out how much you need to pay.

What additional fees do I need to pay on a buy-to-let property?

Aside from the above, there are other costs involved in becoming a landlord and managing a rental portfolio that you may wish to consider:

  • Letting agent fees - Letting agents typically charge 10 to 20% of the rental income as a fee to manage the property, depending on the level of property management they provide.

  • Maintenance costs - Aside from generally keeping the property in good rentable condition, there are a number of regulations that you'll need to ensure you comply with in order to legally offer your property for let. For example, gas safety certification.

  • Income tax - is payable on any rental income. This is charged at the rate applicable to your overall income level. If you buy through a limited company you'll be charged corporation tax instead, which is generally lower.

  • Capital gains tax - When you sell a rental property capital gains tax is payable on any profits made. It’s worth speaking to a tax specialist beforehand.

  • Building and landlords’ insurance - Tenants are only responsible for contents insurance, so, as a landlord you need to pay buildings insurance to cover any structural issues with your property portfolio. You may also want to look into landlords' insurance, to protect your income during tenant-free periods, or if tenants refuse to pay.

Kellie Steedquotation mark
Securing the best buy-to-let rate available to you can help maximise profit. In today's turbulent market, a broker is an excellent resource for landlords looking to make the most of their portfolio.
Kellie Steed, Mortgage Content Writer

Buy-to-let FAQs

Last updated 30 August 2023