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First Time Buyer Buy-to-Let Mortgage

Most people who apply for a Buy-to-Let mortgage are usually landlords with multiple properties, or property owners looking to invest in a Buy-to-Let property and start a business in the rental sector.

So, while it’s not common to find first-time borrowers looking for a Buy-to-Let mortgage, we recognise that everyone must start somewhere.

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Author: Carl Shave - CEO and co-founder
Last updated: 28 Dec 2024

What is the process for a Buy-to-Let First-Time Buyer mortgage?

We can’t pretend the process will be as smooth as if you were applying for a standard residential mortgage. Lenders will be far more cautious in their assessment of your capacity to become a landlord. However, there are lenders who will consider offering a Buy-to-Let First-Time Buyer mortgage.

Most lenders want applicants to have previously owned a residential property. The problem is not necessarily a lack of trust – it’s just that you will be an unknown entity. So, many lenders simply do not want to be the first to say yes to you.

Mainstream lenders use stricter criteria, making it even more difficult to get accepted for some people. However, there are also many specialist lenders out there who take a far broader approach. They will look at all aspects of your income, assets, and financial plan as well. To approach them, you’ll likely need to work with a specialist mortgage broker, as they aren’t always easily accessed.

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An introduction to Buy-to-Let Mortgages

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Buy-to-Let topics

Whether you're investing in your first Buy-to-Let Mortgage or an experienced landlord, we can help.

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Try our Buy-to-Let mortgage calculator

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Buy-to-Let guide

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Useful Information

How much deposit does a first time landlord need?

As a first-time buyer, you are a higher risk than usual and so they will inevitably ask you for a larger deposit. You should expect to provide at least 25% of the property’s value upfront. Although, in some rare cases, a lender may ask for up to a maximum of 60% as a deposit.

As a rule of thumb when it comes to mortgage deals – the larger your deposit supply, the less of a risk you represent. Therefore, the more favourable the deal you will be able to get.

Doesn’t the rent cover the mortgage anyway?

While the rent will cover the mortgage and perhaps a little extra for profit, this only happens when everything goes to plan. There will likely be times when your property stands empty between tenancies. Leaving, you with no income as well as mortgage payments.

You should also bear in mind the additional costs of home ownership and your duties as a landlord. This can include landlord insurance, agency fees and property maintenance. This will also impact your rent level and how it fits with current market rates.

Having a contingency plan in place for vacant periods and missed payments is very important. Otherwise, you could be unable to make mortgage payments.

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How much rent should I charge?

The rent you can charge will depend on a variety of things such as the area and the market. But generally, lenders will expect to see between 125% and 145% of the mortgage payment covered by rental income. This gives them confidence that you will be able to make mortgage payments.

Remember your mortgage payments won’t be your only costs as a landlord. You will need to factor in:

  • Usual property buying costs, e.g., property surveys.
  • Stamp duty where applicable.
  • Solicitors’ fees.
  • Property maintenance, including white goods and furnishing.
  • Property and landlord insurance.
  • Letting agent fees if applicable.
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What documents are needed for a first-time landlord?

Document requirements are the same as those for a standard mortgage. At the very least you will need to provide:

  • A valid form of identification (usually with a photo, like a passport or driver’s license)
  • Proof of address (such as your latest council tax or utility bill)
  • Proof of income (pay slips, bank statement)

They may also require other documents. This will depend on the lender’s criteria, your circumstances, and any evidence you wish to help prove your creditworthiness. For example, a copy of your cash flow forecast or business plan for your property rental business.

First-time buyer Buy-to-Let lenders have evolved to meet new demands in recent years. There are now a handful of high street lenders available, as well as more niche specialist lenders. This means that new products are coming onto the market all the time. Some lenders have even made shifts in their criteria to be more flexible.

While there are many lenders we could recommend for first-time landlords, it would be impractical for us to list them. The deals, rates and criteria offered today could change next week.

Furthermore, your chances of success in obtaining a mortgage are in large part down to your individual circumstances. So, what might be the most suitable lender for one, might not be for another.

At Just Mortgage Brokers, we have great relationships with all kinds of lenders from across the market. With our expert knowledge, we can give you the best opportunity to secure the most suitable mortgage for your circumstances.

Buy-to-Let Mortgages Lenders

The first thing to consider when looking at the best Buy-to-Let mortgage rates is whether you want a fixed rate or a tracker rate.

A fixed rate will stay the same for a certain period- this is usually 2, 3 or 5 years. It will then revert to an interest rate based on the prevailing Bank of England base rate at the time. Allowing you to predict your payments for a defined time and avoiding unexpected rises.

A tracker rate is set as a certain percentage above the Bank of England rate or the LIBOR rate. Again, this is usually set for 3 or 5 years. If this rises or falls, then so will your mortgage payments. The upside of a tracker is that the interest rate is generally slightly lower than that for a fixed rate mortgage.

However, be careful not to base your assessment of a mortgage product on the headline interest rate alone. The initial rate offer duration will vary depending on the deal.

The rate you will be offered may also depend on other criteria that will vary based on the lender. A lot will depend on your individual circumstances and what you want to achieve with your mortgage. This is why we can’t list the most favourable rates here, as they are unlikely to be the same for everyone.

To discover your Buy-to-Let mortgage options, get in touch with one of our advisors today.

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First Time Buyer Buy-to-Let Mortgage FAQs

There are still possibilities available, so yes you can. However, mainstream lenders will likely shy away from lending to you. Meaning, your options will be more limited than they would be if you had a clean credit record.

In these cases, you will need to approach a specialist mortgage lender who operates in this niche area of the market. They take a broader view of an applicant’s circumstances rather than simply deciding based on your credit score.

Specialist lenders tend not to deal directly with the public, usually only accepting mortgage applications through a trusted broker. At Just Mortgage Brokers, we have access to specialist lenders who are comfortable lending to first-time buyers. Get in touch today and we will pair you with one of our expert advisors.

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Many people ask if it is possible to move into their Buy-to-Let property in case it should fall vacant for a while. Unfortunately, it’s a little more complicated than that. The simple answer to the question is no.

When deciding on whether to grant you a mortgage, lenders use different criteria than that for a residential mortgage, basing their decision more on the anticipated rental revenue than on your own personal income.

When you change the nature of how the mortgage repayments are being funded, you are now outside of their assessment for your loan.

You should be aware that lenders do make checks to ensure that borrowers are not living in the Buy-to-Let property. If you breach your mortgage agreement, then they are likely to take severe action. They could ask for the mortgage to be repaid, and you could risk losing your mortgage facility and your home.

The best thing to do in every case is to talk to your lender about your intention to move back in. It may be that the most suitable course of action is to convert your Buy-to-Let into a residential mortgage. If you require mortgage advice about this issue and would like to discuss it in more detail, please get in touch.

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