There is a huge range of choice in the buy to let mortgage market, and the deal you get will depend on how much deposit you have saved up, and how much you want to borrow.

When you are looking for the best buy to let mortgage don't just go for the headline rate - check whether you'll have to pay a fee to take the mortgage out. You may need to remortgage in a few years, and so it's also a good idea to check what charges are involved if you switch mortgage or provider.

The cheapest buy to let deals include:

  • A low interest rate

  • Low fees for taking it out or even a fee free mortgage

  • A low early repayment charge for when you remortgage

You can compare the best deals using our comparison, which includes every buy to let (BTL) mortgage available in the UK.

When you are looking at the buy to let mortgage comparison tables, you will see that each lender has different criteria for lending. One of the key things to look out for is the maximum Loan to Value (LTV) rate which the lender states.

The LTV is the difference between the actual value of the property, and how much deposit you have saved up. So if a lender says the maximum LTV they will accept is 75%, that means you need to have saved up a deposit of at least 25% of the value of the property.

What are buy to let mortgages?

Put simply, a buy to let mortgage lets you borrow money to buy a house that you can then rent out. It's sometimes known as a landlord mortgage, and allows you to let your property to tenants, students or as a holiday home.

It's different from a residential mortgage that you might take out for a home you are going to live in, and the tax treatment is different too.

You can use a buy to let mortgage to invest in a property you rent out to someone else. You cannot use a normal mortgage to do this.

That's because both your lender and the government regard being a landlord as running a business.

When you are thinking about buying a property to rent out, the rent you will receive will need to be more than the cost of your mortgage payments plus the expense of running and maintaining the property. Some landlords make money from the rent they charge, while others benefit from the appreciation in the value of the property itself, or both.

Buy to let rates

The interest rates on buy to let mortgages tend to be higher than normal residential mortgages. That's because there is a greater risk to the lender that you won't be able to cover the cost of paying your mortgage costs. This might be because you can't find suitable tenants, the property is empty for longer than you planned, or your tenants stop paying rent to you.

As a result, buy to let mortgage costs are usually higher than residential mortgages because they often come with:

  • Higher interest rates

  • Higher fees for taking out the mortgage

  • A larger deposit* required: usually at least 25% of the property's value

*Many of the best deals require a deposit of at least 40%, meaning they have an LTV of 60% (see below)

Here is how buy to let mortgages work and how much they cost.

What are the best buy to let mortgages?

The best buy to let mortgage is one which is right for your circumstances, offers a competitive interest rate, low or no arrangement fee, and is flexible enough to allow you to switch at a later date.

You can search our comparison tables to find the best buy to let mortgage for you.

Each lender is shown with the maximum LTV they will accept, plus the initial rate that is on offer and the period it covers (for example, five years). It also shows the lender's Standard Variable Rate (SVR) which is the interest rate you will pay once the initial or fixed period ends.

Finally, our tables quote the Annual Percentage Rate of Change (APRC) which is an indication of what your total mortgage costs would be, expressed as a percentage, were you to keep the mortgage for its full term.

Buy to let deposit: How much do I need?

When you are searching for the best buy to let mortgage, the lender will take into account the size of the buy to let deposit that you have saved up.

This is another area where buy to let mortgages differ from normal mortgages. When you are buying your own home to live in lenders often accept a much higher LTV rate, sometimes as high as 95%.

Most buy to let mortgages from lenders require a deposit of at least 25%, making the maximum LTV much lower at 75%.

Another key difference between buy to let mortgages and residential mortgages is that most normal mortgages require you to pay off some of the capital and some interest on a monthly basis. This is known as a repayment mortgage. Many buy to let mortgages are based on paying only the cost of the interest each month.

This is known as an "interest only" buy to let mortgage and means you will need to have a plan to pay off the outstanding amount you have borrowed at the end of the mortgage term.

Buy to let costs

It can be more expensive to buy a rental property than a home to live in and you need to factor this into your overall buy to let costs. This is because the interest rate and arrangement fee may be higher, plus you will have to pay a higher rate of stamp duty which is a tax when you purchase your property (see below). You'll have to pay the normal costs of conveyancing, including solicitor's and surveyor's fees.

Your lender will expect your rental payments to more than cover the interest you are paying on your buy to let mortgage, so you should bear this in mind when you do your initial buy to let mortgage calculations.

Learn more about the costs of buy to let mortgages.

Other buy to let costs

When you are working out the costs of a buy to let mortgage you also need to factor in:

  • Any charges your letting agent will make

  • Repairs, renovations and inspections required

  • Making sure all gas and electrical equipment is safe and regularly tested

  • Whether you plan to let the property furnished or unfurnished

Buy to let tax & stamp duty

The taxation of landlords has changed significantly over the past few years.
New taxes on buy to let landlords are being phased in. Previously, you could offset your mortgage interest costs and other costs against the buy to let rental income you received.

Furthermore, stamp duty rates on buy to let properties are higher than on residential property purchases.

When you purchase a buy to let property, stamp duty becomes due on any property that is worth more than 40,000 and you pay an additional 3% on top of each band.

Buy to let insurance

Landlord insurance is different from normal home insurance. It isn't a legal requirement, but your lender may ask you to take it out as a condition of you being approved for a buy to let mortgage.

Buy to let insurance can cover several different scenarios, including covering damage to buildings or contents, being taken to court by your tenants, or if you are unable to rent it out or suffer from a void period.

Here is how to get insurance for landlords to cover the risks of your buy to let investment.

Buy to let remortgages

If you have a buy to let property, you will probably want to arrange a buy to let remortgage some time in the future when your current deal ends. This is because you probably won't want to stay on the lender's Standard Variable Rate (SVR) as it tends to be much more expensive than the most competitive deals on the market at any time.

Once your buy to let mortgage initial term has ended, you will usually automatically be put on the lender's SVR unless you apply for another new deal.

Use our buy to let remortgage comparison table to find a mortgage that's right for you.

Buy to let mortgage FAQs

Q

Can I get an interest only BTL mortgage?

A

Yes, many buy to let mortgage are interest only. They let you pay back only the interest owed on your mortgage, not the balance; here is how they work.

Q

What is the maximum age I can get a BTL mortgage?

A

Some lenders offer mortgages that last until you are 85, but others have strict age restrictions. Here is how to get a mortgage when you are older.

Q

Do I need a deposit to get a mortgage?

A

Yes, most mortgages need a deposit, and buy to let mortgages usually require a higher amount than when you buy your own home.

Q

Do I need a specialist mortgage for a buy to let?

A

Yes, because you cannot use a residential mortgage for an investment property. The mortgages in this comparison can be used for buy to let.

About our mortgage comparison

Q

Who do we include in this comparison?

A

We include mortgages from every lender in the UK. They are all from lenders regulated by the Financial Conduct Authority. Here is more information about how our website works.

Q

How do we make money from our comparison?

A

We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more here.
You do not pay any extra and the deal you get is not affected.