Buy-to-Let Mortgages

Lenders typically require rental income to be 125-145% of the mortgage payment at a notional interest rate (usually 5.5-6%). For example, on a £150,000 mortgage at 5.5%, the monthly payment would be around £852. You'd need monthly rent of £1,065-£1,235. Some lenders are more generous, others stricter. We know which lenders offer the best rental calculations for your circumstances.

Buy-to-let mortgages typically require 20-25% deposits, though portfolio landlords may need 25-40%. First-time landlords might find better terms with slightly larger deposits. The LTV you can achieve depends on the property type, your experience, and the lender. HMOs and complex properties often need larger deposits. Strong rental income can sometimes offset smaller deposits.

Since the reduction in mortgage interest tax relief, many landlords use limited companies for tax efficiency. You pay corporation tax (19-25%) instead of income tax (potentially 40-45%) on rental profits. However, company mortgages often have slightly higher rates. You'll need a limited company set up before applying. This structure works best for higher-rate taxpayers building portfolios.

Houses in Multiple Occupation (3+ unrelated tenants sharing facilities) offer higher yields but require specialist mortgages. You'll need HMO licensing, usually larger deposits (25-30%), and specific insurance. Rental calculations are more generous due to higher income. Some lenders won't touch HMOs, while others specialise in them. We know the HMO-friendly lenders and their criteria.

If you have 4+ mortgaged buy-to-let properties, you're a 'portfolio landlord' facing stricter regulations. You'll need to provide full portfolio details, prove all properties have adequate rental income, and may face higher rates or deposit requirements. Some lenders cap portfolio sizes. We work with portfolio-friendly lenders who understand professional landlords and offer competitive terms.

You'll pay income tax on rental profits after expenses. Mortgage interest is no longer fully deductible—you now get a 20% tax credit instead. This particularly affects higher-rate taxpayers. Stamp Duty is 3% higher on additional properties. Capital Gains Tax applies when you sell. Limited companies can be more tax-efficient. Always get independent tax advice before buying to let.