Borrowing with a buy-to-let mortgage: the 5 things you should know

Andrew Mussai

Buy-to-let mortgages follow a different set of rules and requirements than residential mortgages. So what do you really need to know? The differences extend to minimum property value, minimum borrowing amount, expected deposit, and repayment criteria. A lot of these factors are also based on the loan providers. There are many components to consider when figuring out how much you can borrow and how much you need to have in the bank when it comes to buy-to-let. Let’s take a look at the 5 key things every property investor should know…


1. How much do you need to put down as a deposit in a buy-to-let mortgage? 

The average buy-to-let mortgage deposit is 25%, however, you may be expected to provide a larger deposit for new build properties. It’s worth mentioning that the higher percentage deposit you put down, the better interest rates you’ll be likely to receive.


2. What is the smallest buy-to-let mortgage you can get? 

Typically the minimum borrowing amount will depend on each lender's criteria and their appetite for lending. Buy-to-let mortgages can be as low as £25,000, but you may find that you are more restricted with which lenders will take on your case if your loan is below £100,000.


3. What is the limit on buy-to-let mortgages? 

The maximum you can borrow is often tied to the deposit amount. So, not only do larger deposits result in better interest rates, but they also unlock the chance to borrow more. 


4. How is the borrowing amount determined for buy-to-let mortgages? 

The interest cover rate (ICR) is another facet present in the buy-to-let mortgage process. It typically sits at 125% for buy-to-let mortgages. This means your monthly rental income should be 125% of your monthly mortgage payment (based on the interest rate payable), and your property of choice should fulfill this criteria to ensure your eligibility for the mortgage. In some instances, there will be a stressed version of the mortgage rate payable, increasing the total mortgage amount. 


5. How do lenders decide whether you can borrow for a buy-to-let mortgage? 

When calculating mortgages, lenders will account for certain eligibility criteria and look at some personal factors:

  • Age
  • Credit history
  • Financial outgoings
  • Source of income 


So, what should you consider before getting your buy-to-let mortgage?   

Based on all these buy-to-let mortgage requirements it’s important to keep your property value, rental income, and expected deposit in mind before starting the mortgage process. GG Mortgage provides you with a digital process where we do the heavy lifting. If you want to skip the stress, book a call with us.


Andrew Mussai