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A Guide To Buy-To-Let Mortgages

03 May 2022

A Guide To Buy-To-Let Mortgages

Do you want to invest in property? Are you thinking about becoming a landlord? Then this guide is for you, as we explain how buy-to-let mortgages work, and the things you need to know and think about before you start this venture.

How Do I Qualify For A Buy-To-Let Mortgage?

To qualify for a buy-to-let mortgage, you’ll need to meet a few requirements. The first is that you want the mortgage in order to invest in a house or flat, or multiple properties. You also need to understand the risks involved with investing in property, as well as being able to afford it.

Along with being able to afford the investment, you’ll need to have a good credit score (just like how you usually would with a regular mortgage) and minimum credit card debts and other borrowings. You also need to already own your own home, either outright or currently paying off your mortgage.

Some lenders have a minimum personal income requirement of around £25,000. But there are also lenders that won’t base their decision on your income and instead base agreements entirely on projected rental income.

There is sometimes an upper age limit of 70 to 75 for when a mortgage can end. However, not all lenders have upper age limits, with some going as high as 90 years old.

How Does A Buy-To-Let Mortgage Work?

Buy-to-let mortgages are similar to any other regular mortgage, however they have a few differences. The fees in general tend to be much higher, as do the interest rates for buy-to-let. The minimum deposit on buy-to-let is usually around 25% of the property’s value, though this can range between 20 to 40%, much higher than a regular mortgage’s 5 or 10% minimum.

Buy-to-let mortgages usually work the same as interest only mortgages, where you only pay the interest each month. You then pay off the original loan in full at the end of the mortgage term.

Whilst most buy-to-let mortgages are not regulated by the Financial Conduct Authority (FCA), there are exceptions. If you are intending to let the property to a close family member, it will be treated the same as a residential mortgage, often referred to as a consumer buy-to-let mortgage.

The FCA has regulated these consumer buy-to-let mortgages in order to give better protection to borrowers who might not have intended to become landlords, which may mean they’re more vulnerable. This includes circumstances such as inheriting an extra property or moving in with a partner but then renting out your original property on a short term basis.

Getting A Buy-To-Let Mortgage

The amount you can borrow for a buy-to-let mortgage is directly linked to the amount of rental income you are likely to receive. To find out what you can expect to receive through rent, check how much rent is being asked on a property similar to yours. You can also contact local letting agents. Lenders will usually require your rental income from the property to be between 25 and 35% higher than your mortgage payments.

To get started on your buy-to-let mortgage plans, talk to an online mortgage advisor like us. You can start by filling out the buy-to-let purchase form on our website with all your details and getting an instant idea of what to expect. We can help you find the best deal tailored to your circumstances.

Advice and Things to Watch Out For

Your property may not always have tenants, there may be gaps where the property is unoccupied and you aren’t receiving the rental income, so plan for that by keeping a fair amount of savings.  

You’ll also need those savings handy for keeping the property you are letting well maintained, and in case of emergencies like a broken boiler, plumbing problems or other unexpected repair work.

Another case for saving wisely is that house prices could fall, and you might not be able to sell the property for as much as you thought you would. So don’t rely solely on selling the property to pay off the mortgage.

It also costs an extra 3% on Stamp Duty Land Tax (SDLT) for buy to let properties.

Tax For When You Are Buying-To-Let

The income you receive from renting out a property will still be taxed under income tax, so make sure to declare it on your Self Assessment tax return in the same year the money was received in. Depending on your income tax band, the rent income may be taxed at either 20%, 40% or 45%.

Certain allowable expenses can help offset the rental income you receive, this includes property maintenance, council tax and letting agent fees.

Landlords now receive a tax credit based on 20% of the interest on the buy-to-let mortgage payments. Previously, landlords could deduct mortgage interest from rental income to reduce the tax they needed to pay. Unfortunately this is no longer an option, meaning you could end up paying a lot more in tax than before.

Chase Your Property Investing Dreams

In recent years, the government has introduced measures that have shaken up the property market. There has been the introduction of the extra tax as mentioned above, plus the new drive to help people get on the property ladder and own their own homes via the recent First Homes and 5% deposit schemes.

Whilst these new measures and schemes have changed things for landlords, it’s still possible to invest in property and become successful in doing so. The need for property is something that will never change. And even though recent changes have made being a landlord more of a challenge, there will always be people who need or prefer the convenience and non-long term commitment of renting.

For more advice on getting a buy-to-let mortgage, contact us here at Mortgages Online. Our specialist team of experts can help make the process feel much smoother and take some of the weight off your shoulders. So don’t hesitate to get in touch today.

You can get in touch with the team by calling 03300 58 60 58 or email us on


Laura Waller

Laura Waller has been working in the mortgages industry since 2013, joining an independent brokerage in Essex. Laura has CeMAP 2 & 3 – Certificates in Mortgages Advice and Practice. Since then Laura oversees marketing for Mortgages Online, using her experience and expertise to write articles and blogs about mortgages and related topics.

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