Buy To Let Mortgages
Expert buy-to-let mortgage advice for property investors
Thinking about buying your first rental property or adding to your portfolio? The mortgage you choose can make a big difference to how the numbers stack up.
Residential property can be a lucrative investment for many, bringing in rental income as well as the potential of long-term property growth. If you’re looking to buy a property to rent out, rather than to live in, you need a specialist buy-to-let mortgage. Unlike standard residential mortgages, they are designed for landlords and have different eligibility criteria, deposit requirements, and repayment options.
Bennison Brown can help you understand your options, and find a competitive deal to help you get more from your property investment.
Finding competitive mortgage deals on your behalf
The buy-to-let mortgage market is made up of a wide range of lenders, each with their own criteria, rates and product features.
Our expert mortgage advisers search the market on your behalf to save you time and identify deals best suited to your circumstances and investment plans. We take into account factors such as your deposit, the type of property, and how you intend to structure the purchase (be it a repayment mortgage or interest-only mortgage), whether that’s in your own name or through a limited company.
The ‘right’ deal isn’t always about the lowest headline rate. Our aim is to help you make a well-informed choice from a range of suitable options, backed by clear and honest advice.
Buy-to-let mortgage advice tailored to your investment goals
Every landlord’s situation is different, and a buy-to-let deal that works for one may not suit another. A first-time buyer purchasing a single rental property will naturally have different priorities from someone looking to grow an investment portfolio.
We’ll take the time to understand what you’re trying to achieve, whether that’s generating a rental income, building capital growth over time, or expanding an existing portfolio in a structured way. From there, we can talk you through the mortgage rates and options available, and how they fit with your plans.
Remortgaging an existing buy-to-let property
Landlords typically remortgage if their fixed or discounted rate is coming to an end, or to release equity built up in the property, perhaps to help fund another purchase.
As with a new purchase, a lender will look at the rental income the property generates, along with its current value, to decide the amount you can borrow.
Your mortgage adviser will review your existing mortgage, talk you through your options, and help you weigh up whether remortgaging could be a suitable move for your circumstances, whether that means securing a new rate or releasing some equity.
How buy-to-let mortgages are calculated
As part of the buy-to-let mortgage application process, the lender will assess your eligibility, arrange a property valuation, and estimate its potential rental income. This rental estimate matters because it plays a central role in determining how much you can borrow.
Typically, a lender will calculate the interest on your mortgage at a notional ‘stress rate’ (often 5.5%) to allow for potential future rate increases, then require your rental income to cover around 145% of that figure. This buffer is designed to account for costs like maintenance, tax, and possible void periods, helping to make sure the mortgage remains manageable even during quieter times.
As an example: £300,000 mortgage x 5.5% stress rate x 145% = £23,925 required rental income for the year (£1,994 per calendar month).
If the rental income doesn’t meet a lender’s criteria, the lender may consider “top slicing”, where they use some of your personal surplus income to make up a shortfall in the rental calculation. This may allow you to borrow more.
Some lenders may also apply a lower stress rate, particularly if you choose a five-year fixed rate or are purchasing through a limited company with which can also increase the amount you’re able to borrow.
How loan to value affects your buy-to-let mortgage options
Alongside rental income, the loan to value (LTV) of your mortgage plays a significant part in determining which deals are available to you. LTV is simply the amount you’re borrowing, shown as a percentage of the property’s value. So, if you’re buying a £300,000 property with a £75,000 deposit, you’d be borrowing £225,000, which works out at 75% LTV.
As a general rule, the lower your LTV, the wider your choice of rates and lenders is likely to be, since a larger deposit represents less risk to the lender. Most buy-to-let lenders require a minimum deposit of 20-25% (so a maximum LTV of around 75-80%), though this varies by lender and depends on factors such as the type of property and whether you’re buying personally or through a limited company.
How much deposit you put down directly affects your LTV, so aim to put down as much as you can comfortably afford. Your adviser can talk you through how LTV might affect the deals available to you, and help you understand where your deposit could position you in the market.
Why choose Bennison Brown as your buy-to-let mortgage broker?
Whether you’re buying your first rental property or growing an existing property portfolio, we’ll take the time to understand your plans and find mortgage options that fit.
You can expect a dedicated adviser and case manager from start to finish, who has access to deals beyond those available directly from high-street lenders.
Our aim is simple: to make the buy-to-let mortgage process clearer and less stressful, while helping you make a well-informed decision about your investment.
Buy-to-let mortgage FAQs
Why purchase a buy-to-let property?
Buy-to-let property is often seen as a way to work towards long-term wealth and build an additional income stream. It can offer the potential for capital growth over time, regular rental income, and added diversification within your wider financial portfolio. As with any investment, though, returns aren’t guaranteed, and property values can fall as well as rise.
Can you get an interest only mortgage for a buy-to-let property?
On a buy-to-let, you have the choice of a capital repayment or interest-only buy-to-let mortgage. Some landlords opt for interest-only basis to keep monthly payments lower and reinvest any surplus, with the mortgage balance repaid at the end of the term, often through the sale of the property.
Are buy-to-let mortgage interest rates higher than residential mortgages?
Generally speaking, buy-to-let mortgage rates are higher for buy-to-let mortgages than on standard mortgages. That’s because lenders tend to view rental properties as higher risk, as there’s always the possibility of loss of income during void periods between tenants.
The rate varies quite a bit by lender and depends on your deposit size, the type of property, and whether you’re buying personally or through a limited company. It’s worth speaking with an experienced adviser to get a clearer picture of what’s available to you.
What is the difference between a buy-to-let mortgage and a residential mortgage?
For a buy-to-let mortgage, how much you can borrow is mostly determined by the rental income the property is expected to generate. Whereas for a standard mortgage, the loan amount is based on your personal income and outgoings.
Most buy-to-let lenders require a minimum deposit of 20-25%, and interest rates are typically higher than on residential mortgages, reflecting the greater risk. Some buy-to-let lenders require a minimum income of £25,000, while others focus more heavily on the rental income. Most lenders require rental income to exceed the mortgage payments by at least 25%.
Should I purchase a buy-to-let through a limited company?
Many new buy-to-let properties are bought through limited companies, but it’s not right for everyone. To help you fully weigh up your options, our advisers will guide you through the pros and cons, and can refer you to tax professionals who can outline the implications.
Do I need landlord insurance?
Landlord insurance itself isn’t a legal requirement, but if you have a buy-to-let mortgage, your lender will require buildings insurance as a condition of the loan. It’s also worth considering specialist landlord cover for risks such as accidental damage, property owners’ liability, loss of rent and legal expenses.
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