Compare Buy-to-Let Mortgage Rates

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What Is a Buy-to-Let Mortgage?

A buy-to-let or buy to rent mortgage is a type of mortgage specifically for properties that are owned or purchased with the intention of renting them out.

They're often set up on an interest-only basis, which means you only make monthly interest payments each month. The outstanding loan balance - i.e. the amount you borrow - doesn't reduce and is paid back at the end of the mortgage term via a suitable repayment vehicle, usually the sale of the property.

If you rent out a property on which you only have a residential mortgage, you’ll be in breach of your mortgage agreement which could put your property at risk of repossession. To rent out your property without breaching your mortgage agreement you'd have to either obtain consent to let from your existing lender or switch to a buy-to-let product.

You can find out more in our Complete Buy-to-Let Guide

Why Is Finding the Right Buy-to-Let Deal Essential?

Buy-to-let mortgages are designed for people who want to buy a property and rent it out rather than live in it themselves. It’s an investment. Therefore finding the right buy-to-let deal is critical if you want to make the most of your financial venture - otherwise, what’s the point?

As an independent mortgage broker with over 45 years of experience, we're perfectly placed to advise you and find a mortgage that matches your property needs. John Charcol has access to the whole market and we're experienced in finding the most suitable mortgage product for less conventional situations. Contact our experts today to get the right deal for you. 

Buy-to-Let Mortgage Criteria and Considerations

Rental Income

Your adviser will ask you for a rental income estimation when they first gather information about your circumstances and requirements. A rental income estimation is basically how much you think you’ll be able to charge in monthly rent on a property. You can ask estate agents for rental income estimates when you view properties. It’s also worth looking online at the rent for similar properties in the area you want to purchase. You need to provide your adviser with a rental income estimation as the lender will use your expected rental income to calculate what you can afford in monthly interest payments when they put together your DIP (Decision in Principle). They usually ask for rental income to be between 125% and 145% of the monthly interest payments and often conduct a “stress test” assuming an interest rate of around 5% to make sure you’ll be able to cover any fluctuations in interest rates or surprise expenses. Buy-to-let lenders will still look at your personal income to check you would be able to cover any periods when the property is vacant or any future repairs.


Deposit

Rental property mortgages have higher interest rates and usually require bigger minimum deposits than residential mortgages - 20% compared to 5% or 10% - to compensate for the additional risk taken up by the lender.


Age

Minimum and maximum ages for buy-to-let lenders vary but a few will accept applications from people as young as 18 years old and some will go as high as 85 years old. There are even a handful that don’t have a maximum age limit.


Borrower Status

You can be a first-time buyer, first-time landlord, experienced landlord or professional landlord. Which lender you use depends on individual lenders’ preferences, but typically first-time buyers will find fewer lenders willing to lend on buy-to-let properties. Not all lenders accept large portfolios either.


Location of Borrower's Residence

Buy-to-let lenders normally require that borrowers live in the UK. There are some lenders that accept expat applicants, but these underwriters may have slightly stricter overall criteria.


Credit History

A poor credit history can make it difficult to obtain a mortgage, especially one at a particularly competitive rate. There are some lenders that are more flexible than others but these often require that you use a broker like John Charcol.


Tax

Landlords are taxed differently from private residential property owners. You’ll pay additional Stamp Duty when you buy your property and Income Tax on the rental income you receive from your tenants. It’s also worth nothing that you might have to pay Capital Gains Tax if you eventually sell the buy-to-let property.

Why Should You Use a Buy-to-Let Mortgage Broker?

Buy-to-let mortgages can be complicated and it’s the job of a mortgage broker like John Charcol to find you a suitable product.

But why is it so important to use a broker for a buy-to-let?

  • It’s not always easy to find the right information about the potential property types or the affordability criteria you need to meet online. We know the requirements for each lender and will look at your entire situation and future needs, so we can advise you accordingly
  • Some lenders require that you use a broker and won’t accept applications directly from applicants, which means we can give you access to more lenders and better rates
  • Buy-to-lets can be particularly complex, especially if you’re a new landlord. We make sure you understand how these mortgages work and exactly what you’re applying for
  • The adviser assigned to your case will do all the hard work for you, ensuring you get the best deal for your property

How Can John Charcol Help You Get a Buy-to-Let?

We Take Care of Everything

With over 45 years of service, we've seen it all. We can save you money, time and make buying your property easy.

We're Highly Recommended

We have over 1,800 5* reviews on reviews.co.uk, so you can feel confident that your mortgage is in the right hands.

We Give Personal, Expert Advice

We work around your schedule to help you arrange a mortgage that suits your circumstances, no matter how complex.

Our Buy-to-Let Process

Below are the main steps you’ll take to find the best buy-to-let mortgage - from quote to completion.

1. Meeting with Adviser and Mortgage Research

When you phone us, you can either arrange a phone appointment with your buy-to-let mortgage adviser or a face-to-face meeting – whatever suits you. Your adviser will ask you some questions and, once they have all the information they need, they’ll go away and find you the mortgage for your circumstances and future needs. They’ll also arrange a follow up call to present you with what they’ve found. It may require more than one conversation to gather all the right information, depending on where you are in your property search.

2. Decision in Principle

Once you’re happy with their recommendation, they’ll go about securing your DIP (Decision in Principle) - which is basically a promise from the lender that they’ll loan you money on the condition that the information you’ve provided is correct and subject to a valuation of the property.

3. Offer on Property

After you’ve secured a DIP (Decision in Principle), you’ll be in a great position to make an offer on your investment property. Sellers like DIPs. They show you can afford the purchase. What’s more, the fact that you’ve already started preparing for the transaction highlights to them that you’re serious in your intention to buy.

4. Pre-Application and Submission

Following the acceptance of your offer, we’ll send you some information which explains all the documents we need to submit to the lender. You’ll be assigned a client relationship manager who’ll check and submit certified copies of your documents; they’ll liaise with both you and the lender. Your mortgage adviser will then submit the fully packaged mortgage application.

5. Lender Underwriting and Valuation

The lender will underwrite your application; this basically means they’ll verify the information you’ve provided and review all your documents for themselves. They’ll also instruct a valuation for their purposes on the property you want to buy to make sure there are no significant problems with it.

6. Mortgage Offer

If the lender is happy with everything they’ve found, they’ll send you a mortgage offer. They’ll also send us a copy.

7. Conveyancing

After you’ve accepted your buy-to-let mortgage offer, you’ll go through the legal part of the process, known as conveyancing. This is where the solicitors/conveyancers draw up contracts and organise the actual, legal purchase of the property. You’ll also need to arrange buildings insurance at this stage, making sure it’s in place from exchange.

8. Exchange and Completion

Once everything is in place, your conveyancer/solicitor will exchange contracts with the seller’s conveyancer/solicitor. It’s at this point that you put down your deposit and are legally bound to buy the property. You’ll lose your deposit if you pull out after exchange. The purchase completes when money is transferred on an agreed-upon date. As soon as you have a date for completion you’ll know when the property can take tenants, therefore you can start speaking to a letting agent.

Home Insurance

We’re partners with Legal and General, so we can find you buildings and contents insurance for your new property. 

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Protection

It's important to protect yourself against the unforeseen. Our in-house team can organise mortgage protection that's tailored to suit your unique needs.

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JC Legal

We have access to a select panel of trusted conveyancers and solicitors so, not only do we organise your mortgage, we can refer you to a trusted solicitor for the conveyancing part of the process.

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Concierge 

We can help you prepare your property for tenants with our exclusive Concierge Service - available through our partners Just Move In. They’ll arrange all the removals and more.

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Buy-to-Let FAQs

Who Can Get a Buy-to-Let Mortgage?

When assessing whether you’re eligible for a buy-to-let mortgage, lenders assess your potential rental income and look at whether you meet certain criteria. The criteria and requirements you need to meet can vary from lender to lender. Because buy-to-let mortgages are typically seen as riskier for lenders than residential mortgages, they tend to have stricter requirements. To find out your options, call us on 0330 433 2927.

Are Buy-to-Let Interest Rates Different from Residential Rates?

Even the cheapest buy-to-let mortgage rates tend to be a little higher than the rates included in mortgage deals on residential properties as buy-to-lets are riskier investments for lenders.

For example, if you have a mortgage on your home and a mortgage on a rental property, but you find yourself able to make only one of these monthly payments, it’s very likely you’ll prioritise the mortgage payment on your home over the one on the rental property.

Therefore, to compensate for the additional risk, buy-to-let lenders set interest rates slightly higher. They also usually require a bigger minimum deposit – usually at least 20%.

You can look at BTL rates from across the market with our free comparison tool above.

How Many Buy-to-Lets Can I Have?

Lenders have different rules regarding how many mortgages you can take out with them for buy-to-let properties. There are also some limits based upon your entire portfolio, including any properties mortgaged with other lenders. Many high street lenders cap the number of buy-to-let properties at 3 - 5, but there are some lenders that work exclusively with portfolio landlords who own 4 + properties. Find out more about being a portfolio landlord.

How Much Can I Borrow for a Buy-to-Let?

The amount you can borrow and the rates available to you will depend on the size of your deposit and your expected rental income, as this will determine how much you’ll be able to afford in monthly interest payments. Use our buy-to-let calculator to estimate how much you could borrow.

Can You Change a Residential Mortgage to a Buy-to-Let?

You can apply for consent to let on your residential property from your current lender if you only intend on renting it out for a certain period of time - e.g. a year. Alternatively, if you want to let out your current home indefinitely and maybe release some equity from it at the same time to buy a new home, you’ll want to consult a mortgage broker about letting to buy.

Can a First-Time Buyer Get a Buy-to-Let?

It is possible for a first-time buyer to take out a mortgage on a buy-to-let property but there are very few lenders available that offer these kinds of niche products, so you may want to consult a mortgage broker.

Can You Get Mortgage on a Buy-to-Let Property with a Deposit of Less than 25%?

The majority of buy-to-let lenders offer LTVs (loan-to-values) up to 75%. There are several specialist lenders which offer LTVs up to 80%. You may want to speak to a mortgage adviser if you’re after one of these slightly more specialist mortgages as they tend to be relatively expensive.

Can You Apply for a Mortgage in a Limited Company Name?

You can apply for LTD company BTL mortgages in a limited company name as long as the limited company has certain SIC codes. If you’re setting up a company to purchase an investment property, you should seek professional tax advice to help you decide if it’s the right course of action. Find out more in our LTD Company Buy-to-Let Guide.

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