Whether you’re a first-time landlord or a seasoned property investor, we’re here to keep your buy-to-let mortgage journey simple, clear and on the right track.
No impact on your credit score.
Author: Michael Whitehead, Head of Content
Reviewer: Paul Coss, Haysto Co-Founder and Chief Customer Officer
Updated: Jul 08 2025 7 mins
Whether you’re thinking of becoming a landlord for the first time or a seasoned property investor looking to expand your portfolio, it’s important to have a clear understanding of how buy-to-let mortgages work before applying.
This guide breaks everything down clearly, so you know what to expect. With our help, you’ll be able to navigate safely through all the typical twists and turns to make your buy-to-let journey much more straightforward.
A buy-to-let mortgage is a type of home loan you’ll need if you’re buying a property to rent out rather than live in. Unlike a residential mortgage, it’s seen as a business investment. This means lenders will need to be satisfied that the rental income you’ll earn from the property covers the mortgage repayments rather than your personal income.
Most buy-to-let mortgages are arranged on an interest-only basis. With this repayment method, you’ll only pay the interest part of the loan each month, and the capital amount you originally borrowed is repaid in one lump sum at the end of the mortgage term.
To repay the loan, you’ll need a separate repayment plan, which for buy-to-let mortgages usually involves selling the rental property at the end of the term. But you can also use other savings you might have or even remortgage onto another mortgage loan.
If you’d rather pay off some of the mortgage each month, some lenders offer capital repayment options too.
Whilst buy-to-let mortgages share a lot of similarities with residential mortgages, there are some key differences to be mindful of:
Affordability checks: For residential mortgages, the amount you can borrow is based on your personal earnings. With buy-to-let, the main focus is on the rental income.
Mortgage repayments: Interest-only is the norm for buy-to-let, whereas for residential mortgages, you usually pay off the loan bit by bit during the loan term.
Mortgage deposit: You’ll need a bigger one for buy-to-let (usually at least 20%-25%).
Mortgage rates: Buy-to-let mortgage rates are often higher.
The rules: The Financial Conduct Authority (FCA) do not regulate some forms of buy-to-let so you won't have the same consumer protections as residential home loans.
This depends mainly on how much rent the property will bring in. For buy-to-let, mortgage lenders will want there to be a clear buffer between the rental income and the mortgage payments (usually this ranges from 125% to 145%).
So, for every £100 per month you pay on your mortgage, a lender would expect your rental income to be between £125 and £145 per month.
This buffer helps provide additional cover if interest rates rise and/or during periods when the rental property is without tenants.
To see how this might work out for you, based on the anticipated rental income you're expecting from the property you're looking to buy, take a look at our quick and easy-to-use buy-to-let mortgage calculator below.
Mortgage Type
Most mortgage lenders will also require that you earn a minimum salary from your day-to-day employment (typically at least £25,000 per annum) in case you need to cover the costs when there’s no rental income coming in.
Due to the higher risks involved with rental properties, lenders will tend to ask for a larger deposit than for residential mortgages. The standard minimum deposit for a buy-to-let mortgage is between 20% and 25%. Higher deposits will help secure the most competitive interest rates and will attract a wider pool of lenders.
The table below provides an illustration of deposit amounts based on a range of property values.
Property Value | 20% deposit | 25% deposit | 40% deposit |
---|---|---|---|
£150,000 | £30,000 | £37,500 | £60,000 |
£200,000 | £40,000 | £50,000 | £80,000 |
£250,000 | £50,000 | £62,500 | £100,000 |
£300,000 | £60,000 | £75,000 | £120,000 |
Most lenders will expect you to:
Be at least 21 years old (some accept 18+).
Already own your own home.
Have some previous landlord experience (or prove that you have a solid strategy if this is your first time)
Earn at least £25,000 per year from your day-to-day employment.
Have a good financial credit record.
Show that the rent will cover the mortgage comfortably (a rental income forecast can be provided by an ARLA-registered agent).
Using a buy-to-let mortgage can open up a lot of opportunities for landlords, but like any investment, there are some potential risks involved too. Here’s the good and the bad.
Potential to boost your earnings through rental income.
Property values often grow over time.
Interest-only keeps monthly costs lower.
Certain allowable expenses can reduce your overall tax bill.
Bigger deposits and higher interest rates.
Income tax on rental profits.
Extra 3% Stamp Duty on additional properties (valued at over £40,000).
You cover the costs during empty periods.
Managing tenants can be hard work.
Most buy-to-let mortgages take around 6 to 12 weeks from start to finish. It depends on how complex your situation is and how quickly you can get everything together for your application. With this in mind, it's a good idea to prepare in advance and start gathering all the necessary paperwork you'll need.
The usual documents and proof of earnings required for a buy-to-let mortgage application include:
Proof of rental income (you can request a rental income projection from an ARLA-regulated agent)
Your last three months' bank statements
Your last three months' payslips (if employed)
Your latest P60 tax form (showing income and tax paid from each tax year)
Your last three years' certified accounts or SA302 tax calculation and tax year overview (if self-employed)
Proof of deposit
ID documents (usually a passport)
Proof of address (e.g., utility bills or credit card bills)
When you’re looking to arrange a buy-to-let mortgage, there’s more to budget for than just the deposit. Be ready for:
Arrangement fees (£950 - £2,000+)
Valuation fees
Legal fees (£500 - £1,500)
Stamp Duty surcharge (extra 3% on top of standard rates)
Letting agent fees (if you’re using one)
Landlord insurance (more comprehensive than standard cover)
Ongoing maintenance costs
Yes, it’s possible, it really depends on the circumstances, but you’ll need to speak with your current mortgage lender in the first instance. There are usually two options available if you want to change from a residential mortgage to a buy-to-let:
Get consent to let (a short-term agreement to rent it out), or
Remortgage to a proper buy-to-let mortgage if you’re going long-term
Doing it without permission could break your mortgage agreement, so always check first.
Yes, of course. Buy-to-let remortgaging works pretty much in the same way as residential mortgages. If you're existing mortgage deal only has a few months left to run, this is the point where it's wise to be looking at what new deals are available, so you're ready to switch before transferring on to your existing lender's Standard Variable Rate (SVR), which is typically much higher.
If you have a healthy amount of equity in your buy-to-let property coupled with a solid rental record, and the rest of your application is strong, you stand a good chance of qualifying for the most competitive mortgage rate deals.
It's also not uncommon for landlords to look at releasing equity from their buy-to-let properties to raise funds for further property investments.
Having a good mortgage broker (like us!) working on your behalf can also save you a lot of time and, potentially, some money too. Our Mortgage Advisors work closely with the most respected buy-to-let mortgage lenders and would already know which lenders would look most favourably on your application.
Yes, it's possible. It really depends on the type of credit issue you've had, how long since it happened and the amounts involved. Certain minor issues, such as late payments from more than two or three years ago, might not have any significant impact. But, a more severe issue, such as a default or County Court Judgment (CCJ), could make it more difficult.
The good news is, there are specialist mortgage lenders available who are prepared to look at applications with bad credit on a case-by-case basis, and look at the whole picture rather than just the credit score.
To find out more, take a look at our guide: How to Get a Mortgage With Bad Credit.
With the right preparation and guidance, securing a buy-to-let mortgage can be a much smoother ride than you might have expected. Understanding what's involved allows you to make the right decisions that fit with what you want for your rental property. That’s where we can help!
When you choose Picnic, we’ll match you with a Mortgage Expert who has the right experience to help with your specific situation. For buy-to-let applicants, that means you’ll have up to four members of our mortgage team working exclusively on your application from start to finish.
Whatever the circumstances, we’ve got all bases covered. Ready to speak to us? Great, just click on the button below to make an enquiry and we’ll be in touch to get started.
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