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Buy-to-let mortgages for property investors.

Speak to Hillside Finance about buy-to-let mortgages for your rental property or portfolio.

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Mortgage options

The right mortgage depends on what you are buying and how you plan to hold it. Open any option for more detail.

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  • Purchase

    Finance for buying a property to let, whether it is your first or your next one.

    Lenders usually look at both you and the property: the deposit you have available, the rent it can achieve and your wider finances. Getting a sense of what you could borrow before you make an offer can help you judge a property's numbers and move quickly once your offer is accepted. Lenders will also ask for evidence of where your deposit has come from.

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  • Remortgage

    Moving a let property to a new deal, or releasing equity towards another purchase.

    Most buy-to-let mortgages move to a higher reversion rate when an initial deal ends, so it is worth reviewing your options a few months beforehand. A remortgage can also release equity to fund another purchase or improvements, subject to the lender's rental cover and loan-to-value limits. Check for any early repayment charges on your current deal before you commit.

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  • Portfolio

    Lenders often treat landlords with four or more mortgaged rental properties differently and may review the whole portfolio.

    Portfolio landlords can expect a closer look at the whole picture, including a schedule of properties, existing mortgages, rents and overall borrowing. Some lenders also ask for a business plan or cash flow forecast. Keeping these details up to date makes each new application simpler.

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  • Limited company

    Mortgages for properties held in a limited company, often one set up just for holding property.

    Many limited company landlords use a special purpose vehicle, a company set up only to hold property. Lenders usually ask directors and major shareholders for personal guarantees and look at their finances as well as the company's. Product choice and pricing can differ from personal buy-to-let, and there are tax points to consider, so take tax advice before you set one up.

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  • HMOs and multi-unit blocks

    Shared houses and blocks of flats can need specialist lending, licensing checks and a different type of valuation.

    HMOs may need a licence from the local council, and the rules vary by area and property size. Lenders may ask about the number of rooms, the type of tenant and your experience of letting. Multi-unit blocks, where several flats sit on one title, are usually assessed differently from single lets, and some lenders want to see previous landlord experience.

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  • Let-to-buy

    Renting out your current home while buying your next one, which usually means changing the mortgage on the home you let.

    You will usually need your existing lender's permission or a new buy-to-let mortgage on the home you are letting, as well as a residential mortgage on the new one. The rent needs to meet the lender's rental cover test, and your next purchase may be assessed with both mortgages in mind. Keeping your old home can also affect the Stamp Duty you pay.

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For landlords at every stage

  • First-time landlords

    Understanding deposits, rental cover and your responsibilities before you commit.

    A first let involves more than the mortgage: safety certificates, deposit protection, insurance and the rules on renting all need planning. Some lenders ask for a minimum personal income or that you already own a home. Working out the numbers, including empty periods and repairs, gives you a more realistic view of the return.

  • Growing portfolios

    Keeping borrowing, rents and renewal dates organised as you add properties.

    As a portfolio grows, it helps to keep one up-to-date record of each property's value, rent, mortgage and deal end date. This shows where equity could be released and when renewals are coming, and it saves time when a lender asks for a schedule of your properties.

  • Company directors

    Buying through a limited company, usually with personal guarantees to the lender.

    If you are buying through a company, lenders look closely at who owns and runs it. Expect to provide information on directors and shareholders, along with company documents. Holding property this way has its own accounting and tax considerations, so it is worth talking to an accountant early.

  • Coming up to renewal

    Starting early when a fixed rate is about to end, so you have time to compare options.

    Many lenders let you secure a new deal several months before your current one ends. Starting early gives you time to gather paperwork, check current rents and compare a product switch with your existing lender against a full remortgage.

What lenders look at

Every lender has its own criteria, but most applications come down to the same few questions.

Your deposit

Buy-to-let usually needs a larger deposit than a residential mortgage, and many lenders look for around 25% of the property's value.

The deposit is the share of the property's value that you pay yourself, and it sets the loan-to-value of the mortgage. A larger deposit can open up more products, while the lowest-deposit options are often more limited. Lenders will also want evidence of where the money has come from, such as savings or a gift.

Rental cover

Lenders test whether the expected rent covers the mortgage interest, often at a notional rate higher than your actual rate.

This is known as the interest cover ratio. Lenders compare the expected rent with the interest at their stress rate and look for a minimum result, often 125% or more, which varies by lender, product and tax position. If the rent falls short, you may need a larger deposit or a smaller loan.

You as a borrower

Age limits, credit history, income and your experience as a landlord can all play a part.

Lenders check your credit history, existing commitments and your age at the end of the term, and some set a minimum income. They may also ask whether you own your own home and how long you have been a landlord.

The property

Its condition, construction, lease length and location all matter, as does the rent it can achieve.

The lender's valuer reports on the property's value and the rent it could achieve. Short leases, unusual construction, flats above commercial premises and poor condition can all reduce the choice of lenders.

Your wider portfolio

Lenders may ask for a schedule of your other properties and look at overall borrowing and rent.

With four or more mortgaged rental properties, you are usually treated as a portfolio landlord. Expect to share a schedule showing each property's value, rent and mortgage, and sometimes a business plan or cash flow forecast.

How it works

A typical buy-to-let application follows these stages, though timings vary with the lender and the property.

  1. Talk it through

    Tell us about the property, your plans and what you already own.

  2. Look at the numbers

    Deposit, expected rent and borrowing are reviewed so you know where you stand.

  3. Apply

    Your paperwork goes in, and the lender arranges a valuation and underwrites the case.

  4. Complete

    After the offer, solicitors handle the legal work and the funds are released.

Personal name or limited company?

One of the first decisions for many investors. The right answer depends on your own tax position and long-term plans.

In your own name

  • Simpler to set up, with no company accounts to run
  • Rental profit is added to your personal income for tax
  • Mortgage interest relief is given as a basic-rate tax credit, not a deduction from rent
  • Often a wider choice of mortgage products

Through a limited company

  • Run as a company, with annual accounts and filings
  • Profit is subject to corporation tax, with further tax when you draw it out
  • Mortgage interest is generally treated as a business expense
  • Rates and fees can be higher, and moving existing properties in can trigger tax

This is general information, not tax advice. Please speak to a qualified tax adviser before deciding how to hold property.

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What to have ready

These can help things move more smoothly. Lenders vary, so you may be asked for more.

  • Photo ID and proof of address
  • Recent bank statements
  • Proof of deposit and where it came from
  • Proof of income
  • Property details and expected rent
  • A schedule of any other rental properties
  • Current mortgage statements, if remortgaging
  • Company documents, if buying through a company

Costs to budget for

  • Lender fees

    Arrangement and valuation fees, which vary by product.

  • Legal fees

    Solicitors' costs for the purchase or remortgage.

  • Stamp Duty

    Additional properties usually pay a higher rate. Land tax rules differ in Scotland and Wales.

  • Running costs

    Insurance, safety certificates, repairs, any letting agent fees and periods without a tenant.

Thinking about your next buy-to-let?

Tell us about the property and your plans.

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Frequently asked questions

How much deposit do I need for a buy-to-let?

Many lenders look for around 25% of the property's value, though some products ask for more or less. The amount you can borrow also depends on the rent the property can achieve.

How is the amount I can borrow worked out?

Most lenders start with the expected rent and test it against the mortgage interest at a notional rate. The result, known as the interest cover ratio, sets a limit on the loan. Your deposit and personal circumstances also count.

Can I get a buy-to-let as a first-time buyer?

It is possible with some lenders, but the choice is narrower and criteria are usually stricter. It is worth checking the requirements before you start looking at properties.

Do I need to earn a certain income?

Some lenders set a minimum personal income and others do not. Even where the rent is the main test, lenders will generally want to know about your income and finances.

Is a buy-to-let mortgage interest-only or repayment?

Both exist, but many landlords choose interest-only. Monthly payments are lower, but the full loan still has to be repaid at the end of the term, so you need a plan for that.

What is a portfolio landlord?

Lenders commonly use the term for someone with four or more mortgaged rental properties. Applications may then involve a closer review of the whole portfolio and a business plan.

Are buy-to-let mortgages regulated?

Many are not regulated by the Financial Conduct Authority, particularly lending for business purposes and to limited companies. Consumer buy-to-let, for example where you are letting an inherited home, falls under a separate regime.

What happens if the property is empty between tenants?

You still have to make your mortgage payments. Most landlords keep some savings aside to cover empty periods and unexpected repairs.

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