Buy to let
mortgages

A buy to let mortgage is a loan secured on a residential property with the specific aim of letting it out to tenants.

Yes, you will need a buy to let mortgage in place to let out your property to tenants. If you let out your property on a residential mortgage without your lender’s consent, you may be in breach of your mortgage conditions. Get in touch with one of our expert brokers to discuss your options.

The loan to value (LTV) is how much you are borrowing as a percentage of the value of the property in question. Typically, landlords secure buy to let mortgage rates at 75% LTV.

Your gross rental income is the total amount your tenant pays before you subtract any expenses. Your net rental income is your true earnings after you’ve accounted for any fees, running costs, or taxes. To calculate the rental yield, divide your gross annual rental income by the property value, then multiply by 100.

The ‘ICR’ is part of a lender’s affordability assessment and is frequently referred to as part of a lender’s RTI (rent to interest) calculation.

RTI calculations for a five-year fixed rate are set at 145% at the ‘pay rate’ (the actual mortgage rate) for individual borrowers and 125% for Limited Companies. The reason it's lower for Limited Companies is because they generally pay a lower rate of tax. Therefore, lenders underwrite the application knowing you can afford more than if you were borrowing in your own name. Please seek professional tax advice before making any property investment decisions.

Lenders use these RTI checks to assess how affordable a mortgage product is for your current circumstances. It ensures the rental income comfortably covers the monthly mortgage payments and any additional associated costs.  

Buy to let mortgage lenders typically prefer borrowers to put down a 25% deposit. You can get BTL mortgages with a 15% deposit; however, there are fewer products, and the interest rates are higher. Overall, rates are more competitive when you can put down a deposit of 25% or more. 

A residential mortgage is a loan secured on a property for you to live in, whereas a buy to let mortgage is a loan secured on a property you let out or rent to tenants Buy to let mortgages tend to incur higher fees, and mortgage interest rates are typically higher as well, as they are more specialist mortgage products. 

Furthermore, buy to let is not a regulated industry, whereas residential mortgages are. As such, you only have access to the Financial Services Ombudsman and Financial Services Compensation Scheme when applying for a mortgage for your own home. This is because buy to let mortgages are considered to be business transactions, and therefore are not eligible for the FCA’s consumer regulations.  

Arrangement fees are the amount a lender charges to set up the mortgage for you. You usually pay this once the mortgage application completes, although some lenders let you add it to the loan. However, remember that you'll pay interest on the fee if you add it to the loan. 

The fee can be a percentage of the loan or a fixed amount. Some lenders may charge higher arrangement fees to bring down the interest rate. 

Whether a fixed or variable-rate mortgage is better for you will depend on your circumstances. Speak to our expert brokers to discuss your options.

Here are some of the benefits of using MFB to secure your buy to let mortgage: 

1. Full market choice

Working with a whole-of-market broker gives you access to all products available on the buy to let market. Your broker will review the whole market, find you the best options and give you expert advice.  At MFB, we've developed relationships with some of the biggest BTL lenders. This means we can access exclusive and limited-edition ranges you can't get anywhere else.

2. Dealing with experienced professionals 

To reduce the stress and time it takes to complete a mortgage application, working with our expert team at MFB is your best option. We'll make sure you have all the necessary supporting documentation for your application, and package it up. More support and less stress for you, and a higher chance of your lender accepting your application first-time! 

3. Mortgage market volatility 

The mortgage market is constantly changing. Lenders often change criteria and withdraw mortgage rates at short notice, making it difficult to keep up. Our brokers stay on top of the latest changes so they can always provide you with the most up-to-date advice. 

Lenders usually let us know about these changes ahead of time, giving our team time to reassess your application. We'll always try our hardest to secure you the best deal for your property investment plans. 

4. Invaluable advice and support

It's our priority to secure you the best mortgage rate for your needs and provide a seamless mortgage application process. You can ask questions and discuss any concerns with your dedicated MFB broker. They'll highlight the pros and risks of your options to help you make the right financial decisions. We want to support your property investment plans and help you grow your portfolio, every step of the way.  

 At MFB, your broker remains your broker. So when you need us, there's someone here who knows you and your investment goals. 

We have access to all available mortgage lenders and deals on the intermediary market. Our reputation and experience mean that some lenders give us exclusive or semi-exclusive access to products. This means that we have access to mortgages you can't apply for without us. To be sure you're getting the best deal available, speak to our mortgage makers.