There are many rules and regulations that you must follow when it comes to buy-to-let mortgages, and if you want to invest in property, understanding how a buy-to-let mortgage works is essential. Whether you are a first-time buyer or this is your 10th property, this blog will help you gain further insight into how a buy-to-let mortgage works and whether a buy-to-let is worth it.
What Is a Buy-To-Let Mortgage?
A buy-to-let mortgage is a type of mortgage that is designed for people who want to buy a property to rent out to others.
Unlike a standard residential mortgage, a buy-to-let mortgage is different as it is based more on potential rental income rather than your income.
Lenders typically assess how much rent your chosen property can generate and will want it to exceed your mortgage payments by a certain percentage, which is usually around 125-145%.
Want to know more? Check out our complete guide to buy-to-let mortgages.
How Much Deposit Do I Need for a Buy-To-Let Mortgage?
For a buy-to-let mortgage, you need a minimum deposit of 20-25% of the property’s value. However, the more deposits you put in, the lower your interest rate will be. You can use an online mortgage calculator to work out what ratio works best for you.
Larger deposits show the lender that you are serious about your investment, giving you a higher chance of being accepted for a buy-to-let mortgage. When calculating your mortgage online, you must consider:
- Loan amount: Based on property value and deposit
- Interest rate: Fixed or variable
- Rental income: Usually needs to cover 125–145% of your mortgage payment
Example
Let’s say you’re looking to buy a buy-to-let property worth £200,000:
- Minimum 20% deposit:
£200,000 × 20% = £40,000 - 25% deposit (more common):
£200,000 × 25% = £50,000 - 30% deposit (for better rates):
£200,000 × 30% = £60,000
What Is The Interest Rate For Buy To Let Mortgages?
The interest rate for a buy-to-let mortgage typically tends to be higher than residential mortgages. As of 2025, the typical rates range from 4.5% to 6.5% depending on:
- The size of your deposit
- Your credit history
- The rental yield of the property
An option that most landlords choose is an interest-only mortgage, which means that you only pay the interest monthly and repay the remaining capital when you come to sell or refinance the property.
Can You Rent Out Your House Without a Buy-To-Let Mortgage?
Yes, you can rent out your house without a buy-to-let mortgage, however, you must educate yourself on the regulations and possible problems that can come with renting your property out.
You must inform your lender that you will be renting the property. If you rent it out without permission, you risk breaching your mortgage terms-potentially leading to penalties.
If you’re considering becoming a landlord, switching to a buy-to-let mortgage is usually the best long-term solution.
Can a First-Time Buyer Get a Buy-to-Let Mortgage?
First-time buyers can get a buy-to-let mortgage, however, it can be a challenge. First-time buyers are seen as higher risk by lenders, and therefore, the eligibility requirements are stricter. To be eligible for a buy-to-let mortgage as a first-time buyer, you must:
- Give a deposit of 25% or above
- A strong credit history
- Sufficient income
Some lenders may insist that first-time buyers already own a residential property, however, specialist mortgage brokers like us here at JG Mortgage Services Ltd can help you find the right deal if you’re just starting.
Can I Change My Existing Mortgage to a Buy-to-Let?
Yes, you can switch from a residential mortgage to a buy-to-let mortgage, especially if you are moving and want to rent out your current home. This is a process called ‘let to buy’.
Before you switch your mortgage from residential to a buy-to-let, you must:
- Check if your lender offers buy-to-let options
- Check whether your property meets rental yields
- Check whether you are financially eligible for a second mortgage (if you are buying a new home)
What Fees Do I Need to Pay on a Buy-to-Let?
Multiple potential fees come with buy-to-let properties, these include:
| Fee Type | Description |
| Arrangement Fees | Charged by lenders for setting up the mortgage. |
| Valuation Fees | Covers the lender’s valuation of the property to assess loan suitability. |
| Legal Fees | Paid to a solicitor or conveyancer for handling the legal aspects of the sale. |
| Broker Fees | Charged by mortgage brokers for finding and arranging the right mortgage deal. |
| Stamp Duty Surcharge | An additional 3% stamp duty charged on second homes or investment properties. |
Wondering whether buy-to-let is worth it? Despite these added fees, it can be a lucrative investment. However, we always recommend seeking professional advice.
Ready to Explore Your Buy-To-Let Mortgage Options?
At JG Mortgage Services Ltd, we specialise in helping first-time landlords and experienced investors find the best buy-to-let mortgage deals tailored to their goals.
We offer comprehensive support and education when it comes to buying mortgages, and we are here to find you the best possible option that will maximise your profits.
We will provide you with personalised mortgage advice and help with your affordability assessments. We are here every step of the way with our buy-to-let mortgage support, giving you all the support you need.
Get in touch with our team today and let us help you with all of your mortgage queries.
