March 19, 2024 12:26 pm

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Nikka Sulton

Considering purchasing a property for rental purposes? Buy-to-let mortgages offer a viable option. Understand deposit requirements, lender assessments, and their impact on mortgage rates through this detailed guide.


What is a buy-to-let mortgage?

A buy-to-let mortgage (BTL) is designed for individuals interested in purchasing a property for rental purposes rather than personal residence. Typically sought after by investors or landlords seeking to expand their property portfolio, these mortgages are structured as interest-only, requiring borrowers to pay only the interest on the loan amount, rather than the principal.


What is the minimum deposit for a buy-to-let mortgage?

Buy-to-let mortgages usually demand a larger deposit compared to residential mortgages, ranging from 20% to 25%. Lenders perceive them as riskier due to reliance on rental income for repayment.


Can I get a buy-to-let mortgage with a low deposit?

Securing a buy-to-let mortgage with less than a 20% deposit can pose challenges, but it’s feasible with certain criteria met:


  • Rental yield falls within the range of 5% to 8%
  • Minimum annual income of £25,000
  • Age requirement of over 21
  • Good credit score


Additionally, consider engaging a mortgage broker to assist in finding the most suitable deal.


What types of deposits will lenders accept?

Your buy-to-let mortgage can come from various sources, provided you show proof. These include:

  • Personal savings
  • Inheritance
  • Selling another property
  • Mortgaging another property
  • Loan from family


How will my deposit affect my mortgage rate? 

Typically, a larger deposit leads to better mortgage rates and lower interest rates. With a smaller deposit, options may be limited, and lenders might perceive your application as riskier.

Explore our latest properties across the UK for your next investment. Our homes boast energy efficiency, modern design, flexible living spaces, and contemporary features.





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