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10 Chartered Accountants


Buy to let mortgages what you need to know.
22 September 2022

So you’re thinking of getting a buy-to-let mortgage? Whether you’re a first-time landlord or an experienced investor, a rental income is a beneficial investment, but there are some essential things you need to know before buying a mortgage.

In this blog post, we’ll discuss the basics of buy-to-let mortgages and outline what you need to do to get one. We’ll also answer some common questions about these types of mortgages. So if you’re considering becoming a landlord, read this post!

What is a buy-to-let mortgage?

A buy-to-let mortgage is different from ordinary mortgages as it is a loan specifically designed for people looking to purchase property to rent it out. These mortgages can be used to buy residential and commercial properties, and they usually have higher interest rates than standard mortgages. The lender perceives buy-to-let investors at a higher risk than owner-occupiers.

How much can I borrow with a buy-to-let mortgage?

The amount you can borrow with a buy-to-let mortgage will depend on several factors, including your income, how much deposit you are willing to put down, the value of the property you’re looking to purchase, the mortgage lender requirements and your rental income plan. Generally, you can expect to borrow anywhere from 60-80% of the property value.

What are the eligibility criteria for a buy-to-let mortgage?

You’ll need a few things to be eligible for buy-to-let mortgages.

First, check your credit report before applying for a mortgage. This will help you identify potential problems that could lead to your application being rejected.

Secondly, most lenders will require that you have a minimum income of £25,000 per year.

Additionally, you’ll need a good credit score and a deposit of at least 25% of the property value. Finally, you’ll need to prove that you have enough money to cover the mortgage payments even if your property is vacant for some time.

Do I need an accountant if I want to get a rental income through buy-to-let mortgages?

When it comes to buy-to-let mortgages, there are a lot of rules and regulations to navigate. While you are not required to have an accountant, having one on hand is generally a good idea. This is because they can help you with things like tax returns and ensure that you are claiming all of the expenses that you’re entitled to.

Additionally, an accountant can help you set up a limited company if you want to purchase multiple buy-to-let properties. Getting buy-to-let mortgages can be a complicated process, but having professional guidance will make it much simpler and straightforward. In the end, working with an accountant can save you time, money, and a lot of stress.

What are the risks of buy-to-let mortgages?

Of course, with any investment, there are risks involved. One of the main risks associated with buy-to-let is that your tenant may default on their rent or damage your property.

Additionally, you may have periods of time where your property is vacant, which can impact your ability to cover the mortgage payments. It’s essential to be aware of these risks before buying a mortgage. That’s why you must protect yourself and have adequate landlord insurance.

Landlord insurance can help protect you from financial losses if your tenant defaults on rent or damages your property. Additionally, shopping around for the best interest rate on your mortgage is essential, as this can help reduce the amount of money you need to pay each month. By being aware of the risks and taking steps to protect yourself, you can be a successful buy-to-let investor.

Are companies able to get a buy-to-let mortgage?

Yes, companies can get buy-to-let mortgages. These types of mortgages work in the same way as they do for individuals. However, there are a few different things that you’ll need to take into account. For example, you’ll need to provide evidence of your company’s financial stability, and you may be required to have a larger deposit than an individual would. Speaking to a mortgage advisor to determine your chosen lender’s specific requirements is essential.

What factors will a commercial lender consider for a buy-to-let mortgage?

There are a few things that commercial lenders will take into account when considering a buy-to-let mortgage, and here is only a handful of them

  • The property
  • Deposit - avoid a minimum deposit and aim for a larger deposit!
  • Ability to make monthly mortgage payments
  • Credit history
  • Income
  • Generate a reasonable rental income
  • You are aware of the potential risks involved

What if I have a bad credit score?

Bad credit can significantly impact your ability to get buy-to-let mortgages, especially if you want to purchase a limited company buy-to-let. Mortgage lenders will typically look at your credit score and history when considering you for a mortgage, and if they see anything negative, it could put them off approving your loan.

This is because they’ll view you as a higher-risk borrower and worry that you might be unable to keep up with repayments. As a result, it’s essential to try and clean up your credit file before applying for a mortgage to have the best chance of being approved.

This can involve paying off any outstanding debts, ensuring that all information on your file is up-to-date and accurate, and keeping up with regular payments in the future. By taking these steps, you can help improve your chances of being approved for a limited company buy-to-let mortgage.

What are the tax implications of taking out a buy-to-let mortgage?

Taking out a buy-to-let mortgage is a big financial commitment. Not only do you have to worry about making monthly repayments, but you also need to be aware of the tax implications. In most cases, you’ll be liable for paying council tax and income tax and pay capital gains tax on any profits you make from renting out your property.

However, there are some deductions that you can claim to reduce your tax liability. For example, you can deduct the mortgage interest from your rental income when calculating your income tax. You can also claim capital gains tax relief if you sell your property at a profit. If you’re thinking of taking out a buy-to-let mortgage, it’s vital to seek professional advice to ensure that you understand the tax implications.

Getting the best deal on a buy-to-let mortgage

There are a few things you can do to increase your chances of getting a good deal on a buy-to-let mortgage:

  • Shop around, don’t just take the first deal offered to you. Talk to different mortgage lenders and compare buy-to-let mortgages and how much similar properties are.
  • Consider using a broker. A good broker will have access to buy-to-let deals that you won’t be able to find yourself.
  • Review your finances, and ensure you have all your paperwork in order before making any applications for buy-to-let mortgages. Lenders will want to see proof of your deposit, income and existing debts.
  • Consider fixed-rate buy-to-let mortgages, with interest rates currently low. Fixing your rate could help you save money in the long term.

With buy-to-let mortgages, so many options and products are available that it can be challenging to know where to start. Speaking to an expert for mortgage advice can help you find the right mortgage for your circumstances and ensure you get the best possible deal. You will receive up-to-date information on buy-to-let mortgages’ latest rules and regulations. They will also be able to recommend other products and services that may benefit you, such as insurance.

Getting expert advice from a mortgage advisor in Northampton is the best way to ensure that you make the right decision when buying a buy-to-let mortgage.


Buy-to-Let properties are a significant investment and an excellent way to generate a rental income. There are many things to consider when taking out a buy-to-let mortgage, from the type of property you’re purchasing to the company you’re receiving your rental income from and any extra costs it may endure, such as insurance, agent fees, tax, stamp duty etc.

However, by researching and speaking to a mortgage advisor, you can ensure that you find the right buy-to-let mortgage for your needs. And with the recent changes to tax rules, now is an excellent time to consider moving your buy-to-let property into a limited company. So be sure to speak to an accountant today to discuss the benefits of this option.

Take the first steps and contact us today; we will be happy to answer any of your questions and give our expert advice!

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