Deposits, rental stress tests, personal vs limited company, portfolio landlord rules, and specialist property types — everything you need to invest.
Buy-to-let (BTL) mortgages are specifically designed for properties you intend to rent out rather than live in. They work differently to residential mortgages in several important ways — from how affordability is assessed to the level of deposit required and the tax implications of ownership.
Whether you're buying your first investment property or adding to an existing portfolio, this page covers everything you need to know before you apply.
| Factor | Residential mortgage | Buy-to-let mortgage |
|---|---|---|
| Deposit required | 5–10% typically | 25% minimum (some lenders 20%) |
| Affordability basis | Your personal income | Rental income (stress tested) |
| Interest rates | Generally lower | Slightly higher, reflecting investment risk |
| Repayment type | Usually repayment | Often interest-only (lower monthly cost) |
| Tax treatment | Owner-occupied — no rental tax | Rental income taxed as income |
| Stress test | Standard income multiples | Rental income must cover 125–145% of payments at a stressed rate |
Rather than your personal income, BTL lenders primarily look at the expected rental income from the property. They apply a stress test to ensure the rent would still cover the mortgage payments even if interest rates rose significantly.
Most lenders require the monthly rental income to be at least 125–145% of the monthly mortgage payment, calculated at a stressed interest rate (typically 5–6% regardless of the actual rate you're offered). This is called the Interest Coverage Ratio (ICR).
For example: if your mortgage payment at the stressed rate would be £800/month, a lender using 125% ICR would require rental income of at least £1,000/month before they'll lend.
Your personal income becomes relevant when rental income is tight — some lenders allow higher earners to 'top up' from personal income if the rental coverage falls slightly short.
This is one of the most significant decisions for any BTL investor and it depends on your personal tax position. There's no universally correct answer — we recommend speaking to a qualified accountant as well as your mortgage adviser.
Simpler to set up. Rental income is taxed at your personal rate (20%, 40%, or 45%). Mortgage interest relief is limited to 20% tax credit regardless of your tax band.
Rental income is taxed at corporation tax rates (currently 25% for profits over £50k). Full mortgage interest deducted as a business expense. More lenders available for portfolio investors.
Higher-rate or additional-rate taxpayers who plan to hold and grow a portfolio long-term. Less benefit for basic-rate taxpayers or those planning to sell properties soon.
Limited company mortgages can have slightly higher rates. There are also additional legal and accounting costs. We run the numbers with real figures for your situation.
If you own four or more mortgaged buy-to-let properties, you're classified as a portfolio landlord under UK mortgage regulations. This triggers additional requirements from lenders:
We prepare a full portfolio presentation before approaching any lender. This means we go to the right lenders with a complete, professional case rather than discovering limitations mid-application.
Not all investment properties are straightforward single lets. We have access to specialist lenders for:
Properties with 3+ tenants from different households sharing facilities. Require specialist HMO licences in most areas and specialist mortgage products.
Assessed on projected rental income rather than a standard tenancy agreement. Seasonal income patterns are factored in differently.
A single building containing multiple self-contained flats under one freehold. Specialist lenders only — standard BTL lenders don't cover these.
Some lenders apply restrictions on new build BTL, particularly flats. We know which lenders are most accommodating and what valuations typically come back at.
Typically a minimum of 20 to 25 percent, though a larger deposit gives you access to better rates and more lenders. The exact requirement depends on the property, the expected rent, and your circumstances.
Lending is based mainly on the expected rental income, which is stress tested against the mortgage payments using an interest cover ratio. Some lenders also consider your personal income, known as top slicing, where the rent alone is not quite enough.
Yes. Many landlords hold buy-to-let property in a limited company for tax efficiency. We will explain whether a personal or company application suits you, and we recommend taking specialist tax advice alongside our mortgage advice.