Buy-To-let Mortgage Deals & Rates

What is a Buy-to-Let mortgage?

A buy-to-let mortgage is used by people who are looking to purchase a property to rent out, rather than getting a standard mortgage for a property they will live in themselves. There are several differences between a BTL mortgage and a residential mortgage: 

• Interest-only payments: Most people will opt to take their BTL mortgage on an interest-only basis, this means only the interest is paid each month leaving the capital to be repaid at the end of the mortgage. Lenders are keen to allow this on BTL, this helps investors to maximise the monthly rental income and realise the growth in the property’s value over time.
• Rental income assessment: Affordability is assessed using the rental income rather than personal income. Lenders will use the potential rental income for the property to ensure it covers the monthly mortgage payment. The lender will use their own calculation to assess if this fits their affordability calculation; typically lenders require the rent to be at least 125% of the monthly interest payment.
• Higher deposit: BTL mortgages often require you to put a larger deposit down, this is usually around 25% of the property’s value but there are some lenders with products that will allow a 20% deposit.

Mortgage types for a Buy-to-Let mortgage

There are two main types of mortgage to choose from:

Interest-only mortgages:Interest-only mortgages are the most common for buy to let mortgages. Monthly payments are lower because you only pay the interest, with the capital repaid at the end of the term. Many landlords plan to sell the property to repay the mortgage, although the property’s value could fall, so it’s important to have a backup plan. Making regular overpayments, if your product allows, can help reduce the outstanding balance more quickly and lower long-term interest costs.

Repayment mortgages: consists of both interest and capital, meaning that by the end of the mortgage term, providing all monthly payments have been made, you will own the property outright.

HMO and Limited Company Buy-to-Let Mortgages

House in Multiple Occupation (HMO) is a type of Buy-to-Let mortgage for properties rented to multiple unrelated tenants. While it can offer higher rental yields, lenders apply stricter criteria involving licensing, safety standards and often lower maximum Loan-to-Value (LTVs). Many investors choose to buy HMOs through a limited company known as a Special Purpose Vehicle (SPV). An SPV is a company set up solely to own and manage property, with no other business activities. This simple structure can make the mortgage process easier for lenders to assess and may offer tax advantages and smoother long-term portfolio growth for investors. If you need advice, Ascot Mortgages can help you find the most suitable solution.

Additional costs associated with Buy-to-Let mortgages

When buying any investment property, there are extra costs to consider. These can include arrangement fees, valuation fees, legal fees and Stamp Duty, which has an additional 3 percent surcharge for BTL properties. You should also factor in maintenance and repairs, landlord insurance, letting agent fees if you plan to use one, and potential tax implications such as Capital Gains Tax on future profits and income tax on rental income.

Use our free BTL Mortgage Calculator to estimate how much you could afford or speak to one of our brokers to compare buy to let mortgage rates and receive a personalised quote.

What is a Let to Buy mortgage?

A Let to Buy mortgage allows you to rent out your current home so you can purchase a new residential property to live in. It essentially means converting your existing residential mortgage into a Buy to Let mortgage and then taking out a new residential mortgage for your onward purchase.

Most people use the equity in their current home as the deposit for their next property. When you switch to a BTL mortgage, affordability is assessed using the rental income. For the new residential mortgage, affordability is based on your personal income.

If you don’t need to release equity, you may be able to keep your existing mortgage but request Consent to Let from your lender.

How does Let to Buy work?

Let to Buy involves two mortgages running at the same time. You remortgage your current property onto a Buy to Let deal to legally rent it out and release equity, which becomes the deposit for your new home. This allows you to keep your existing property as an investment while moving forward with your next purchase. Although it may sound complex, with the right support the process is often more straightforward than expected.

Why choose a Let to Buy mortgage?

People choose Let to Buy for various reasons. You may be struggling to sell your home in time, want to keep it as a long-term investment, be moving in with a partner, or want the additional financial flexibility that rental income provides. Let to Buy can give you options and act as a helpful stepping stone if you’re not yet ready to sell.

Want to talk it through?

If you’re thinking about letting out your current home and buying a new one, we can help you work out whether a let to buy mortgage is the right option for you.

We’ll help explain how it works, help you compare the let to buy mortgage rates, and guide you through the process from start to finish.

Get in touch today to chat with one of our specialists for a free, no-obligation mortgage quote.