Why it matters
What Buy-to-Let Mortgage means for a landlord
The affordability of a buy-to-let mortgage turns on the interest coverage ratio, not your wages, so the achievable rent and the lender’s stress rate decide how much you can borrow. Since Section 24 removed full mortgage-interest relief, a higher-rate landlord can face tax on rental income even when cashflow after the mortgage is thin, which is why some landlords hold property in a limited company where interest is still fully deductible. Rate volatility since 2022 has made the mortgage the single biggest variable in buy-to-let returns.
Worked example
How it plays out
Ali wants to buy a £240,000 flat with a 75% buy-to-let mortgage of £180,000. The lender checks the expected rent against its interest cover test and asks for a 25% deposit, £60,000. Even though Ali earns well, the rent has to pass the stress test for the loan to go ahead.
Common mistakes
Where landlords go wrong
- 01Assuming your salary decides how much you can borrow.
- 02Forgetting arrangement and valuation fees.
- 03Letting a property on a residential mortgage.
What to do
A short checklist
- Get the achievable rent confirmed.
- Compare fees as well as rates.
- Check lender rules on HMOs and tenancy types.
Sources
Checked against these sources on 16 September 2026. A guide to the rules in England, not legal advice: for a dispute or a possession claim, speak to a solicitor.
