Buy to Let

Buy to Let mortgages are similar to a standard mortgage with some differences. Interest rates are usually higher than a residential mortgage with a larger deposit, anything up to 25% of the overall price.

Rental Income

Lenders will assess the expected rental income of the secured property and in most cases rental stress tests. These then determine the maximum loan that can be borrowed. Annual rental income must be at least equal to 125% of the annual interest payment determined by the interest stress rate of 5.5% – not the actual interest rate.

Interest-only Mortgages

Payment of Buy-to-Let Mortgages can be either via interest only, capital repayment or part interest/part repayment. Investors tend to favour interest only and not repayment. This means that you only pay the interest every month and then can clear the capital debt when the property is then sold. There are several advantages to an interest-only loan; the monthly payments are cheaper, although the lack of capital repayments to reduce your outstanding debt.


Please note that not all Buy to Let Mortgages are regulated by the Financial Conduct Authority.

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