Buy-to-Let Mortgages: Unlock Your Property Potential in 2024

Whether you’re a Buy-to-Let professional or a first timer, our experienced mortgage advisors are ready to help.

Author: Carl Shave - CEO and co-founder

Last updated: 27 Jul 2024

An introduction to Buy-to-Let Mortgages

What is a Buy-to-Let mortgage?

A Buy-to-Let mortgage is for a property that you intend to rent out to someone else, rather than live in. Regulated Buy-to-Let mortgages are for when you intend to rent to an immediate family member.

Tailored Buy-to-Let mortgage advice

Are you….

If you’re a first-time landlord, a good place to start looking for properties is in developing areas. Properties in areas like this could lead to lower purchase prices and offer bigger growth opportunities. Understanding rents in the area can help you to ensure your potential mortgage payments can be covered by your rental yield.

Before committing to any investment, it’s important to check that your finances will allow you to move forward, maintain and manage properties. If you’re just starting out as a landlord, starting with a smaller, less expensive property minimises your risk and helps you to gain experience.

If you’re thinking about getting started as a landlord, we recommend meeting with one of our expert Buy-to-Let mortgage advisors. They can provide you with expert guidance as you start your new journey.

Becoming a landlord accidentally could happen through receiving an inherited property or through relocation. If you’re in this situation, a good place to start is understanding your legal responsibilities. Ensuring that you’re compliant with landlord regulations can help you to avoid potential pitfalls.

Becoming a landlord by accident can be overwhelming if it’s not your area of expertise. However, there are property management companies out there that can provide support in these situations.

Our experts can guide you through Consent to Let if you’re stuck and can’t sell your home. They are experienced with Let to Buy if you’re looking to move home whilst renting out the other, and as above, we can also help you with a longer-term solution which is Buy-to-Let.

You can count on us to provide clear, practical advice designed to support accidental landlords in navigating owning a property with confidence.

As a professional landlord, it’s important to regularly manage your portfolio to ensure you have the most competitive mortgages in place. You can also release equity strategically to encourage growth.

A professional landlord would be considered a landlord with four or more Buy-to-Let mortgages across all lenders^[1^]. As a result, mortgage lenders require detailed information on a portfolio landlord’s properties to ensure you don’t borrow too much money against your properties.

Lenders’ criteria vary greatly from their loan-to-value ratios (LTVs) to rental stress tests. Our Buy-to-Let mortgage advisors are experts at navigating these complexities to find the right mortgage for your needs.

As with someone who is new to Buy-to-Let, as an overseas landlord, it’s important to understand the market where you want to invest. Our experts offer insight into important legal and regulatory aspects that may impact your investment decisions such as the Non-resident Landlord’s Scheme (NRLS).

You should be aware of regular changes in currency as this could mean that your rental income may vary. Opening a UK bank account could help to better manage these currency risks.

Property managers are perfect for those living overseas. They can help to manage your property or properties or utilise property management software to help streamline your operations.

You can rely on Just Mortgage Brokers for expert guidance tailored to international investors.

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Understanding your Buy-to-Let borrowing capacity

Understanding your borrowing capacity when it comes to Buy-to-Let mortgages gives you the insight you need to make informed financial decisions.

There are different scenarios that can affect both your monthly mortgage payments and the interest that you pay on a Buy-to-Let mortgage.

High deposit vs. low deposit

High deposits:

Deposit amount: £250,000 (50% of property value)
Property value: £500,000
Loan amount: £250,000
Interest rate: 3%
Loan term: 25 years

In this case, the borrower’s borrowing capacity is higher because they have a larger deposit. This reduces the risk for lenders and makes the borrower more appealing.

In cases like this, lenders may offer a lower interest rate due to the lower loan-to-value ratio (LTV), resulting in lower monthly mortgage payments.

Low deposits:

Deposit amount: £125,000 (25% of property value)
Property value: £500,000
Loan amount: £375,000
Interest rate: 4%
Loan term: 25 years

In this case the borrower’s borrowing capacity is lower because they have a smaller deposit. This increases the risk for the lender making the borrower slightly less appealing.

In cases such as this, the lender may offer a higher interest due to the higher LTV, resulting in higher monthly mortgage payments.

Different interest rates

Lower Interest Rate with a 25% Deposit:

Deposit Amount: £125,000 (25% of property value)
Property Value: £500,000
Loan Amount: £375,000
Interest Rate: 2.5%
Loan Term: 25 years

The lower interest rate of 2.5% results in more manageable monthly mortgage payments. The borrower’s borrowing capacity may be higher due to the reduced interest costs and lower risk associated with the lower LTV ratio.

Scenario 2: Higher Interest Rate with 25% Deposit

Deposit Amount: £125,000 (25% of property value)
Property Value: £500,000
Loan Amount: £375,000
Interest Rate: 5%
Loan Term: 25 years

A 5% interest rate introduces a much higher cost of borrowing. This also reduces the borrower’s borrowing capacity despite the same 25% deposit. Due to the reduced borrowing capacity, lenders may impose stricter criteria or offer less favourable terms due to the higher interest rate and associated risks.

These different scenarios show how deposit amounts and interest rates, can influence borrowing capacity and affordability in property investment decisions.

The impact on your borrowing capacity

Deposit Amount: A higher deposit typically increases borrowing capacity because it reduces the LTV ratio, potentially lowering mortgage interest rates and monthly payments.

Interest Rates: Lower interest rates enhance borrowing capacity by reducing monthly payments, whereas higher interest rates decrease borrowing capacity due to higher monthly costs.

In summary, your deposit amount and interest rate play a crucial role in working out your borrowing capacity. A higher deposit generally allows for a larger loan amount and lower interest rates, while lower deposits may lead to higher borrowing costs and potentially stricter lending criteria. Interest rates directly affect monthly mortgage payments, influencing affordability and overall borrowing capacity.

Check your capacity

What’s the right fixed or tracker Buy-to-Let rate?

Whether you choose a fixed or tracker Buy-to-Let mortgage rate could depend on:

Your ability to overcome declines in your income.
Your financial goals.
The condition of interest rates in the market.

Fixed rate mortgages provide stability and protection from potential interest rate increases. This makes them a good option for cautious landlords.

Tracker rate mortgages may offer lower starting interest rates and provide advantages when interest rates are lower. However, they do come with the risk that your monthly repayments might increase should interest rates rise.

Talk to one of our mortgage experts today so we can help you find the best mortgage deal for your needs.

Explore your options

How do I qualify for a Buy-to-Let mortgage?

Qualifying for a Buy-to-Let mortgage involves meeting specific criteria set by lenders. Some criteria are:

Minimum Age: Most lenders require applicants to be at least 21 years old.
Deposit: A minimum deposit of 25% is typically required.
Rental Income Projections: Lenders usually require the projected rental income to cover 125-145% of the mortgage repayments.
Affordability Assessment: All lenders require an affordability assessment to ensure that you can cover your mortgage payments, especially in times when your property may be vacant.

This list is not exhaustive, and criteria can vary from lender to lender. We recommend that you speak to an expert Buy-to-Let mortgage advisor that can guide you through the process.

Our initial consultation is completely free of charge, get in touch today to get started.

See if you qualify

How can I maximise Buy-to-Let profits?

Maximising Buy-to-Let profits could include things like:

Making property improvements:
- Enhancing your property with modern amenities, fresh paint, and updating kitchens/bathrooms could attract higher-paying tenants.
Optimising your rental income:
- By regularly reviewing local rental rates, you could ensure your rent is competitive yet maximised. Offering furnished rentals could also provide additional income through rental payments.
Effective Tenant Management: Retaining good tenants is achievable by maintaining open communication, addressing issues promptly, and offering lease renewals with modest rent increases.
Preventative maintenance:
- Regularly inspecting your property to catch and fix small issues before they get worse could prevent costly repairs. This could reduce long-term maintenance expenses.
Energy efficiency:
- Investment in energy-efficient appliances and insulation could lower utility costs, making your property more attractive to tenants whilst also reducing your overall expenses.
Self-management:

If it is feasible, manage the property yourself to save on letting agent fees.

[1] Bank of England’s PRA Underwriting Standards for Buy-to-Let Mortgage Contracts

Carl Shave

CEO and co-founder

About the author

Carl Shave has been involved in the mortgage & finance industry since leaving education and is one of the co-founders of Just Mortgage Brokers. He has written guest posts and provided journalist comments for companies such as The Times, FT Adviser, Mortgage Strategy, Mortgage Solutions and others, demonstrating his extensive industry knowledge.

Frequently asked questions

As with all deposits, you will likely need a minimum percentage of the property’s value. For a Buy-to-Let, this is typically a minimum of 25%.

Yes, Buy-to-Let (BTL) mortgages are generally more expensive than standard residential mortgages. There are some reasons as to why, including but not exclusive to:

Higher Interest Rates

BTL mortgages typically come with higher interest rates. Lenders perceive Buy-to-Let mortgages as a higher risk because rental income can be unpredictable, and landlords might face longer periods of vacancy.

Larger Deposits

Lenders usually require larger deposits for BTL mortgages, often a minimum of 25% of the property value, compared to 5-10% for residential mortgages. This higher deposit requirement reflects the increased risk to the lender and can make the initial outlay more expensive.

Stress Testing

Lenders apply more stringent stress testing to Buy-to-Let mortgage applications. They assess whether the rental income will cover the mortgage payments by a significant margin (typically 125-145%), which can lead to higher costs if the projected rental income is lower.

Limited Product Options

There are fewer Buy-to-Let mortgage products on the market compared to residential mortgages, limiting choices, and potentially leading to higher costs due to less competition among lenders.

By understanding these factors, you can better prepare for the costs associated with a Buy-to-Let mortgage and make informed decisions.

Our expert Buy-to-Let mortgage advisors are on hand to help you find the right mortgage product for your needs.

There are several costs involved with Buy-to-Let. This could include:

The costs associated with buying the property,
Acquiring the correct safety certificates to ensure the property is compliant,
Letting agent fees,
Mortgage payments,
Landlord Insurances,
Building Insurances,
General building maintenance

For a full breakdown of what these costs include read our helpful guide on the costs of Buy-to-Let.

As a landlord, you have legal responsibilities to maintain your property and protect yourself and your tenant. We have written a full guide on a landlord’s responsibilities but as an overview, this includes:

Keeping your properties safe and free from health hazards for your tenants.
Ensuring all electrical and gas equipment is installed safely and maintained regularly.
Providing an Energy Performance Certificate (EPC) for the property. In 2025, there are new EPC regulations coming into place that rented properties should have a rating of C or above.
Ensuring that your tenant has the right to rent your property if it is in England.
Ensuring your tenants are provided with the How to Rent checklist when they begin their tenancy with you.

Yes, Buy-to-Let mortgages for limited companies offer the option to secure mortgages for properties using a limited company instead of your own name.

Learn More About BTL for Limited Companies

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