Buy to let mortgages
Compare the best buy to let mortgages available today. Enter a few basic details to see buy to let mortgages from the whole of the mortgage market.
Compare the best buy to let mortgages on the market today
Enter a few basic details and we’ll show you the best buy to let mortgage rates from the whole of the market, so you can find the right deal to suit your needs.
You can adjust your options on the results page if you’d like to try out a few different mortgage options.
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If you’d like to speak to a mortgage advisor about your BTL options, we’ve partnered with Fluent Mortgages to provide you with market leading, fee free advice. Arrange a call-back today and one of their expert mortgage brokers will talk you through your options, and help you to find the best buy to let mortgage deal for you.
What is a buy to let mortgage?
Buy to let mortgages (or BTL mortgages) are specifically for those who want to purchase a property to rent out.
If you’re thinking about buy to let as a way to invest your money and generate an income, our buy to let mortgage guide can help get you started. You can also check the best buy to let mortgage rates on the market today by using our free mortgage comparison tool.
How to compare buy to let mortgages
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Who are buy to let mortgages for?
Buy to let mortgages are for anyone who wants to buy, or who currently owns, a property that they want to let out.
Whether it’s your first venture as a landlord, or you’ve already built up a portfolio of rental properties, the right buy to let mortgage can help you keep costs down and maximise your profits.
How do buy to let mortgages work?
With a buy to let mortgage, you usually only pay off some of the interest you owe each month. You only have to pay off the capital you’ve borrowed when the mortgage term ends.
This can help keep your monthly payments to a minimum, allowing you to maximise your rental earnings potential. However, you’ll need to keep in mind the amount you’ll owe if you decide to sell the property.
Learn more about how buy to let mortgages work in our article, Understanding buy to let mortgages.
How much can I borrow on a buy to let mortgage?
How much you can borrow on a buy to let mortgage depends on your deposit, personal circumstances and how much you’re expecting to earn in rental income.
To get an idea of the amount of rental income you can expect to receive, you can research how much similar properties rent for online, or contact a letting agent in the area you want to buy. Lenders normally require you to earn 20-30% more in rental income each month than your mortgage payments.
If you’d like, you can arrange to talk to an expert mortgage advisor from Fluent Mortgages about your specific circumstances.
What are the criteria to get a buy to let mortgage?
To be eligible for a buy to let mortgage, you’ll usually need to either own your own home outright or have a mortgage on it. It also helps your case if you have a good credit history and don’t have large debts.
With buy to let mortgages, your lender will want to know how much rental income the property is likely to generate, although many will also want to look at any other sources of income you have. Lenders typically set an upper age limit – so you usually can’t be older than 70 or 75 when the mortgage term finishes.
Frequently asked questions
What is the difference between buy to let mortgages and residential mortgages?
There are several differences between residential and buy to let mortgages:
The size of your deposit: You may be able to apply for a residential mortgage with just a 5% or 10% deposit but if you want to take out a buy to let mortgage, you’ll usually need a deposit equivalent to at least 20% or 25% of the property value.
How affordability is assessed: When you take out a normal residential mortgage, lenders will look at your income and outgoings to help them work out how much you can afford to borrow. With a buy to let mortgage, however, your lender will usually want to know how much rental income the property is likely to generate, although some will want to look at any other sources of income you have too. Lenders typically look for rental income to be equivalent to at least 125% of your mortgage payments, or sometimes more than this.
How the mortgage is repaid: Buy to let mortgages are usually arranged on an interest-only basis, which means you only pay back part of the interest you owe each month and none of the capital. At the end of the mortgage term, the property must either be remortgaged again, sold so the capital can be repaid, or you’ll need to have built up enough savings to clear your mortgage.
Most residential mortgages, however, are arranged on a repayment basis, which means you pay back some of the interest and some of the capital each month, so that by the end of the mortgage term there’s nothing left to pay. You can also arrange your buy to let mortgage on a repayment basis in a similar way if you want. This means your monthly payments will be higher, but you will be paying some of the money off your mortgage each month.
Buy to let mortgage rates and arrangement fees are often higher than standard residential mortgage rates. This is because lenders consider this type of mortgage a higher risk than a standard residential mortgage as you might not always be able to find tenants, or your tenants could fail to pay their rent on time. You should keep these extra fees in mind when considering buy to let mortgages.
What deposit do I need for a buy to let mortgage?
You’ll need a bigger deposit to take out a buy to let mortgage than you would for a residential mortgage. Most lenders will require a deposit of 20-25% of the property’s value, whereas its possible to get a residential mortgage with a deposit of just 5%.
Lenders require larger deposits for buy to let mortgages, as they consider them riskier than residential mortgages.
What are the interest rates for buy to let mortgages?
The interest rate you’ll get will depend on the deposit you provide and the type of mortgage you choose. You can find the best buy to let mortgage rates available from the whole of market by using our buy to let mortgage comparison tool. Buy to let mortgages are commonly interest-only mortgages – This means the amount you have to repay on a monthly basis is significantly lower and you have to pay the capital back only at the end of the term. Repayment BTL mortgages are also available if you wish to go pay the capital along with your monthly payments.
Is a buy to let mortgage cheaper than a standard mortgage?
Buy to let mortgage rates tend to be slightly higher than residential mortgage rates. This is because lenders consider this type of mortgage higher risk than a standard residential mortgage as you might not always be able to find tenants, or your tenants could be late with their monthly payments. Rates can vary widely though, so it’s worth comparing a wide range of buy to let mortgages so you can be certain you’ve found the most competitive deal for you.
What additional fees will I need to pay on a buy to let property?
You’ll need to cover the costs of buying, which can include:
- Survey fees
- Solicitor’s fees
- Stamp Duty Land Tax
There are also running and maintenance costs associated with any kind of rental home.
A sales or letting agent will also charge a fee. When you sell the property you might have legal and marketing fees to pay.
You will also need a buildings insurance which can help to protect your investment.
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Tax on a buy to let mortgage
Your rental income is taxed in the same way as any other income, so the amount of tax you’ll pay will depend on the level of income you receive (after deductible costs, such as maintenance and repair costs, letting agent fees, council tax and landlords’ insurance) and how much other income you bring from your work or other sources.
Depending on which tax band your combined income falls into, you’ll either pay no tax, or you’ll be a basic, higher or additional rate taxpayer and must pay income tax at 20%, 40% or 45% respectively.
You can read more about tax on buy to let properties in our guide.