Buy-to-let mortgages explained

A buy-to-let mortgage is a loan secured on a residential property that you plan to rent out to tenants rather than live in yourself¹. In law, a Buy to Let Mortgage is defined as a loan to one or more borrowers secured by a mortgage over a residential property that is let, or intended to be let, at the time the mortgage is granted, and that is marketed as being intended for that purpose². If you are buying a property to let out to tenants, or you plan to let your current home, this is the type of mortgage you need³.

It works differently from a residential mortgage in three main ways. The deposit is larger, usually 20% to 25% of the property's value rather than the 5% that can be enough for a home you live in⁴. The amount you can borrow is driven by the rent the property is expected to earn, not by your salary⁶. And most buy-to-let lending is not regulated by the Financial Conduct Authority (FCA), which changes what protection you have if something goes wrong⁷.

What a buy-to-let mortgage is and who it is for

A buy-to-let mortgage exists for one purpose: borrowing against a home that will be occupied by tenants. The legal definition is a loan secured by a mortgage over a residential property that is let, or intended to be let, when the mortgage is granted². In most cases it is treated as a commercial loan, because the rental income it generates is classed as business income¹.

That business character matters, because it is what separates buy-to-let from ordinary home lending. The mortgage rules that govern residential loans assume the property is the borrower's home. When a property is let to tenants, the law treats the arrangement differently: a borrower is regarded as entering into the mortgage for business purposes if they bought, or are financing the purchase of, the land intending it to be occupied on a rental basis and not by themselves or a related person, or if they own other land that is let or secured by a buy-to-let mortgage⁴. The FCA's own guidance notes that a buy-to-let loan secured on the property to be let is potentially a regulated mortgage contract, but may be excluded, either as a loan to a commercial borrower or under the buy-to-let exclusions⁵.

Who is it for? Broadly, two groups. The first is the deliberate investor buying a property to rent out. The second is the accidental landlord: someone who ends up letting a property they previously lived in or inherited, for example after moving for work or inheriting a family home. That second group is often steered towards a specific type of loan called a consumer buy-to-let mortgage, covered later in this page, which is regulated where standard buy-to-let is not¹.

Buy-to-let deposits: usually 20% to 25% of the property's value

The deposit is the first big difference from a residential purchase. While a home you live in can be bought with a deposit of at least 5% of the property's value¹⁰, buy-to-let lending demands much more. The minimum deposit for a buy-to-let mortgage is usually 25%⁴, and you will generally need at least a 20% deposit, which means a maximum loan to value of 80%⁵. Some guidance puts the floor lower still, at a deposit of at least 15% of the property's value for landlords¹¹, so the market is not uniform, but the practical starting point for most lenders is a deposit of a fifth to a quarter of the purchase price.

The reason lenders want more is risk: rental income can stop, tenants can fall into arrears, and the property is not the borrower's home, so the lender's security is the asset itself. A bigger deposit gives a bigger buffer if house prices fall.

Loan to value, or LTV, is the loan expressed as a percentage of the property's value, and it is the number lenders work from when setting both how much you can borrow and what deals are available. The dedicated guide to loan to value explains how it is worked out and how it changes as prices move and the loan is paid down.

How lenders decide how much you can borrow: rent, not salary

On a residential mortgage, the lender starts from your income: your credit score, your income and outgoings, and the value of the home you want to buy¹², with a lender looking at your savings, spending habits and credit rating before making an offer⁷. Buy-to-let turns that on its head. Your eligibility is based on how much rental income you can bring in from the property being let out, rather than how much money you earn⁶.

The test most lenders apply is rental coverage. Most lenders require the rent to cover around 145% of the monthly mortgage repayments⁶. If the achievable rent is lower than the coverage requirement allows, the loan is cut to fit, regardless of how much the borrower earns. Lenders typically have the expected rental income assessed as part of the valuation, and the loan offer follows from that figure.

Two practical consequences follow. First, a high salary does not unlock a bigger buy-to-let loan; a strong rental market does. Second, the assessment is usually made against a notional or stress-tested rate rather than the rate you actually pay, so the rent must comfortably exceed the real monthly payment. Before applying, most lenders will tell you how much they are willing to lend, called a mortgage or agreement in principle¹³, and the guide to how much can I borrow covers how that works for residential lending, where the arithmetic is different.

Interest-only, repayment or part and part

Buy-to-let mortgages are generally interest-only, rather than repayment⁶. With an interest-only mortgage, the monthly payment covers only the interest charged, and the original loan is repaid in full at the end of the term, usually by selling the property or from other resources. The guide to interest-only mortgages explains how this works in detail.

The reason interest-only dominates buy-to-let is cost and flexibility: the monthly payment is lower than a repayment loan on the same balance, which makes it easier for the rent to cover the 145% test, and many landlords plan to sell the property at some point and repay the loan from the proceeds. The rules on buy-to-let interest-only mortgages are less strict than for residential lending, because interest-only borrowing is standard for these purchases¹⁴.

The trade-off is the same as on any interest-only loan: the balance never shrinks. If the property is worth less when the mortgage ends than when it started, the sale may not cover the debt, leaving a shortfall the borrower still owes. Some lenders offer repayment buy-to-let mortgages, where each month reduces the balance as well as paying interest, or part and part arrangements that combine the two. A repayment loan costs more per month, which makes the rental coverage test harder to pass, but it removes the risk of a shortfall at the end. The comparison page on repayment vs interest-only sets the two side by side.

Fees and costs on top of the mortgage

Buy-to-let borrowing carries the same kinds of fees as residential lending, and often higher ones. Arrangement or product fees, valuation fees and legal costs all apply, and buy-to-let product fees are frequently larger than their residential equivalents. Some fees can be added to the loan rather than paid upfront, but that is not free money: adding a fee to the loan means paying interest on it for the life of the deal. In one worked example, adding a mortgage fee to the loan cost just over £316 extra over the course of a five-year fixed term¹⁵.

Beyond the mortgage itself, a landlord's running costs include:

• Buildings insurance: lenders require the property to be insured, and a tenanted home needs landlord cover rather than a standard home policy. You do not have to buy insurance from your mortgage lender, so you can shop around¹⁶.
• Maintenance and safety: the property must be kept fit for tenants, including the safety and energy standards that apply in the nation where it stands.
• Letting and management: agent fees and, where a property is advertised, the costs of finding tenants.
• Tax: rental income is classed as business income¹, and the tax treatment of rental profits and mortgage interest is its own subject, covered in the site's tax section.

Early repayment charges can also apply if the mortgage is repaid or moved during a fixed or discounted period, exactly as on a residential loan. The guide to early repayment charges explains how these are calculated and when they bite, and mortgage fees and charges covers the fee types in detail.

Who can get a buy-to-let mortgage

Lenders set their own criteria, but some patterns are consistent. Many buy-to-let mortgages are available only to existing property owners: Swansea Building Society, for example, states its buy-to-let mortgages are available to existing property owners who want to purchase or remortgage a property to be let¹⁷. Others go further and will consider applications from first-time buyers, treating them the same as anyone else, with no previous landlord experience needed¹. The conflict between these positions is real and unresolved: some lenders will not lend to a first-time buyer at all, while others actively will, so eligibility depends heavily on which lender is approached. A broker can identify which lenders accept a particular situation, and the guide to mortgage advice explains how to find one.

Other common conditions include:

• Minimum income: many lenders want the borrower to have a separate income, often from employment or self-employment, in addition to the rent.
• Age limits: lenders set maximum ages at the end of the term, as with residential lending.
• Credit history: adverse credit narrows the field but does not close it; the guide to bad credit mortgages covers the residential equivalent.
• Property type: some lenders restrict flats, new-builds, houses in multiple occupation or ex-council homes.
• Number of mortgages: lenders cap how many buy-to-let loans one borrower, or one portfolio, can hold.

For the accidental landlord, the relevant product is the consumer buy-to-let mortgage, designed for people renting out a personal property they have previously lived in or inherited¹. Swansea Building Society's consumer buy-to-let product is aimed at exactly this group¹⁷.

Consent to let and let to buy: renting out your current home

If you want to let the home you live in, you cannot simply do it. A residential mortgage is granted on the basis that you occupy the property, and letting it without permission is a breach of the terms. The first step is to contact your lender: some will grant a consent to let on your current deal, while others may insist on switching to a buy-to-let mortgage⁴. Some lenders will grant consent to let for short letting periods, depending on your reasons and the lender's policy⁶. The narrow guide to consent to let covers the process, the conditions lenders attach and the fees they charge.

Let to buy is a bigger step. It is when you remortgage your current home onto a buy-to-let mortgage and release some cash to put down as a deposit on a new home, then let out the current home³. It involves having two mortgages at the same time: a buy-to-let mortgage on the existing home and a standard residential mortgage on the new home⁶. Lenders will usually want proof that you are buying a new home at the same time as switching your mortgage, normally a copy of the mortgage offer for the new home⁶. The full guide to let to buy covers the process in detail.

Two restrictions are worth knowing. You cannot port a residential mortgage to a buy-to-let property: not all mortgages are portable, and a residential loan cannot be ported to a property being let¹⁸. And if your current home has a Help to Buy equity loan, you cannot change your repayment mortgage to a buy-to-let mortgage until you have repaid the equity loan in full¹⁹. The guide to remortgaging with a Help to Buy equity loan covers that repayment.

Most buy-to-let mortgages are not regulated by the FCA

The FCA does not regulate most buy-to-let mortgages⁷. This follows from the business test described earlier: a loan entered into for business purposes sits outside the regulatory regime that governs residential mortgages, which is why the affordability rules, the protections and the complaint routes that apply to a home loan largely do not apply to an investment loan.

The exception is the consumer buy-to-let mortgage. In law, a consumer buy-to-let mortgage contract means a buy-to-let mortgage contract which is not entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower²⁰. The same definition appears in the Mortgage Credit Directive Order 2015²¹. This is the accidental landlord's loan: a property previously lived in or inherited, let out without a property business behind it. Firms offering these must hold a consumer buy-to-let permission, and the borrower gets the protections of a regulated mortgage, including access to the Financial Ombudsman Service.

The scale of disputes in this market is small but not zero: the Financial Ombudsman's quarterly complaints data recorded 157 complaints opened about buy-to-let mortgages, consumer or non-consumer, in the first quarter of 2025/26²². The guide to mortgage rules and your rights sets out what protection applies to which kind of loan.

Renters' Rights Act: what changes for landlords in England

The Renters' Rights Act 2025 received Royal Assent on 27 October 2025, and most of its provisions are being implemented in phases²³. The changes that matter most to landlords took effect on 1 May 2026, when the Act made significant changes to the private rented sector in England⁸. Existing assured shorthold tenancies automatically changed to assured periodic tenancies on that date²⁴.

The headline changes for a landlord letting property in England are:

• Section 21 evictions are banned from May 2026²⁵, and a landlord will not be able to take possession using the accelerated possession procedure unless temporary rules apply²⁴.
• Rent increases are limited: a landlord can only increase the rent once a year, with two months' notice²⁶.
• Rent in advance is capped: asking for payment of rent in advance after a tenancy agreement is signed is limited to one month's rent, or 28 days' rent where the rental period is shorter⁸.
• Bidding wars are banned: landlords cannot hold bidding wars on their properties²⁷.
• Discrimination is illegal: it is illegal for a private landlord to discriminate against tenants because they claim benefits or have children who live with or visit them. Tenants have the right to make a written request to keep a pet, and a landlord can only refuse with reasonable grounds, with no requirement for the tenant to pay additional insurance or extra rent for pet damage⁸.
• A landlord register is coming: landlords in each region across England will be gradually asked to sign up to the new register your rental property service²⁸.

Not every tenancy is covered. The changes do not apply to tenancies with high rent over £100,000 a year, lodgers, or business tenancies, and there are special rules for some private rental agreements to students. Social housing, including most housing association tenants, is unaffected until a later date⁸. HMRC's Valuation Office will become responsible for decisions on challenges to rent increases in England²⁸.

Further requirements are on the way: subject to consultation, privately rented homes in England will be required to be energy efficient by 2030 and to meet a new Decent Homes Standard in the mid-to-late 2030s²⁵. A PRS Landlord Database and a PRS Landlord Ombudsman service are expected in a later phase of implementation²³.

What happens if you cannot keep up repayments

A buy-to-let mortgage is secured on the property, and the consequences of missing payments are the same in kind as on any secured loan: if you do not make payments on a mortgage, you could lose the home²⁹. For a landlord, that means the rental property is repossessed, and the tenants' position is affected too, a situation covered in the guide to renting a home your landlord's lender is repossessing.

The Mortgage Charter, the government-backed package of lender commitments for borrowers in difficulty, does not help here: its commitments do not apply to buy-to-let mortgages⁹. That removes one route that residential borrowers have, so a landlord in trouble needs to go to the lender early and to free debt advice directly.

Free, independent help is available:

• National Debtline publishes guidance on what to do if you are worried about losing your home, including checking whether a tenancy changed under the Renters' Rights Act²⁴, and separate guidance on rent arrears for tenants in England and Wales⁸.
• Business Debtline covers rent arrears for landlords and the self-employed in England and Wales³⁰.
• Independent Age offers advice for older people at risk of losing their home²⁶.
• In Scotland, the Home Owners' Support Fund includes a Mortgage to Rent scheme, under which the local council or a housing association buys your home, allowing you to stay as a tenant³¹.

The guides to mortgage arrears, repossession in England and Wales and what a lender must do before going to court cover the process and the borrower's rights in detail. Because most buy-to-let lending is unregulated, some of the complaint routes described there may not be open to a buy-to-let borrower, which is a further reason to take advice early rather than after possession proceedings have started.