Buy-to-Let Mortgage
Quick answer
A mortgage designed for a property bought to rent out rather than live in. Lending is assessed mainly on the rent the property will produce, not just the borrower’s salary, and most are interest-only. Deposits are larger than for a residential mortgage — typically at least 20–25% — and the interest is relieved only as a 20% tax credit under Section 24.
At a glance
- Deposit
- Usually 20–25%+ (LTV up to ~75–80%)
- Assessed on
- Rental income vs interest (ICR stress test)
Full guide
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Open full guideWhy Buy-to-Let Mortgage matters for landlords
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.
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Official sources
LetCompliance editorial reviews this entry every quarter against the sources above. Always confirm specific duties with a qualified solicitor or your local council.
Related terms
Consent to Let
Written permission from a residential mortgage lender allowing the owner to let out a home bought on an owner-occupier mortgage, without switching to a buy-to-let product. Usually granted for a limited period (often 6–12 months) and sometimes with a rate uplift. Letting without it breaches the mortgage terms and can, in principle, let the lender demand full repayment.
Interest Coverage Ratio (ICR)
The rental stress test buy-to-let lenders use to decide how much they will lend. It measures whether the rent covers the mortgage interest by a required margin — commonly 125% for basic-rate borrowers and 145% for higher-rate borrowers — tested at a notional stressed interest rate rather than the actual pay rate.
Interest-Only Mortgage
A mortgage where the monthly payment covers only the interest, leaving the original capital to be repaid at the end of the term. Most buy-to-let mortgages are interest-only because it maximises monthly cashflow and, historically, the tax treatment of interest. The capital must still be repaid eventually — usually by selling or remortgaging the property.
Loan to Value (LTV)
The size of a mortgage expressed as a percentage of the property’s value. A £150,000 loan on a £200,000 property is 75% LTV. Buy-to-let lending is usually capped around 75–80% LTV, and lower LTVs unlock better interest rates.
Remortgaging
Switching a mortgage to a new deal, either with the same lender (a product transfer) or a new one, usually when a fixed or tracker period ends. Landlords remortgage to avoid rolling onto the lender’s higher standard variable rate, or to release equity to fund another purchase.
Bailiff (County Court Bailiff / High Court Enforcement Officer)
The court officer who enforces a possession order at the eviction stage. After a landlord wins a possession order under Section 8 (post-1 May 2026 the only route in England), if the tenant does not leave by the date in the order the landlord applies for a Warrant of Possession (CCB) or a Writ of Possession (HCEO). The bailiff or HCEO then attends to take physical possession; only they may lawfully evict, self-help eviction by the landlord is a criminal offence under section 1 of the Protection from Eviction Act 1977.