Buy to Let Mortgages

Most lenders require a deposit of at least 25%, though some may ask for more depending on your financial circumstances and the property type. Speak with us to determine the exact deposit you’ll need.

The amount you can borrow typically depends on the potential rental income of the property. Lenders often require the rental income to cover at least 125% - 145% of the monthly mortgage payment, including an assumed interest rate used for calculation.

For example:

• Property Value: £200,000

• Potential Monthly Rent: £1,000

• Stress Test Calculation (145%): £1,000 ÷ 1.45 = £689 monthly mortgage payment allowance.

• Loan Amount Estimate: If a lender uses an assumed interest rate of 5.5% for stress testing, the annual mortgage payment would be approximately £689 × 12 = £8,268. Dividing this by 5.5% gives a maximum loan amount estimate of around £150,000 (£8,268 ÷ 0.055).

These calculations are estimates only, as actual borrowing limits will depend on lender criteria, your personal circumstances, and market conditions. Contact us to get a tailored borrowing estimate for your situation.

When purchasing a buy-to-let property, you may encounter the following fees:

• Valuation Fees: Charged by lenders to assess the property’s value.

• Arrangement Fees: A fee charged by lenders for setting up the mortgage, which can range from a flat fee to a percentage of the loan.

• Legal Fees: Costs for solicitors or conveyancers to handle the legal aspects of your purchase.

• Stamp Duty Land Tax (SDLT): Buy-to-let properties in the UK incur a 3% surcharge on top of standard stamp duty rates. For example:

  • Property Value: £250,000

  • Standard Stamp Duty: £2,500 on the first £125,000 (at 2%) + £3,750 on the next £125,000 (at 3%) = £6,250.

  • Additional SDLT (3% surcharge): £250,000 × 3% = £7,500.

  • Total Stamp Duty: £6,250 + £7,500 = £13,750.

• Broker Fees: If you use a mortgage broker, they may charge a fee for their service. At Possible Mortgages, we’ll outline any broker fees upfront so you know exactly what to expect.

• Early Repayment Charges (ERCs): If you repay your mortgage early, you may incur a penalty, especially during the fixed-rate period.

Understanding all associated fees is essential to budgeting effectively for your investment. Contact us for a detailed breakdown of costs specific to your situation.

Yes, certain property types can be harder to mortgage due to perceived risks or limited lender options:

• New build flats: Lenders may perceive them as overvalued or at risk of depreciation.

• Ex-local authority (ex-council) properties: These can have restrictions on ownership or be located in less desirable areas.

• High-rise flats with no lifts: Accessibility issues can deter lenders, especially for properties above certain floors.

• Non-standard construction (e.g., timber, steel frames, or concrete): Homes built with unconventional materials may not meet standard lending criteria.

• Flats above commercial premises: Properties above restaurants, shops, or launderettes may face noise, odour, or marketability concerns.

• Holiday homes: These may have inconsistent rental income, making them riskier investments for lenders.

If you’re considering one of these property types, contact us to explore specialist lenders who may accommodate your needs.

While you don’t need a tenancy agreement to apply for a mortgage, lenders typically require an Assured Shorthold Tenancy (AST) agreement before releasing funds. This agreement outlines the terms of the rental and protects both the landlord and the tenant. Having a clear AST is also essential for managing tenants legally. Contact us for help navigating this process.

A consumer buy-to-let mortgage is designed for accidental landlords—those who become landlords unintentionally, such as inheriting a property or renting out a home they once lived in. These mortgages are regulated more like residential mortgages and come with additional protections. Contact us to determine if this type of mortgage is right for you.

Yes, but your options may be limited, and lenders often require a higher deposit. Contact our experts to explore lenders willing to work with first-time buyers.

No, buy-to-let mortgages are strictly for rental purposes. If you wish to live in the property, you’ll need a residential mortgage. Speak to us to find the right solution for your needs.

Buy-to-let income is taxed at personal rates, while limited company profits are taxed at corporation rates. Speak with a tax advisor or visit Gov.uk for more details. Contact us to explore your mortgage options.

An HMO is a property rented out to three or more tenants who share common facilities like kitchens and bathrooms. These properties require special mortgages and additional safety regulations. Check Gov.uk for more details or contact us to learn more about HMO mortgages.