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    Entering the world of buy-to-let mortgages may seem like a daunting challenge, particularly when it comes to saving up for that crucial deposit. While buy-to-let mortgage deposits required are typically more compared to residential mortgages, don’t let this dissuade your property investment dreams!

    Below we offer you guidance on how to enter the rental market with a smaller deposit in hand. In our helpful guide, we’ll highlight which mortgage lenders provide mortgages with low deposits and competitive rates, as well as offer advice and strategies on increasing your odds of approval for one or more mortgage loans.

    How Much Deposit for Buy To Let Mortgages?

    Deposit requirements for buy-to-let mortgages typically range between 20% to 40% of the property value; however, this percentage varies based on several factors including lender policies, your credit history, and the nature of rental property that you plan on purchasing.

    Most UK mortgage lenders require at least 25% deposit for their mortgage offerings; however, larger deposits often yield better terms and interest rates, making a larger deposit an important consideration in your investment planning.

    Low deposit mortgages tend to be most suitable for properties owned by prior owners; when purchasing flats, maisonettes, or any new build property the deposit requirement is a minimum of 25%.

    Key Points to Remember:

    • Deposit Range: Typically 20% to 40%, with most over half of UK mortgage lenders requiring at least 25%.
    • Influencing Factors: Mortgage lender policies, your credit history, and the investment property type.
    • Advantages of a Larger Deposit: Potential access to better mortgage terms and lower interest rates.

    What is the lowest buy to let mortgage deposit?

    The lowest buy to let mortgage deposit offered is 15%. You will find that fewer lenders offer this lower-than-average buy-to-let mortgage deposit. A lender that does is Vida Homeloans who currently offers 15% deposit for some of their buy-to-let mortgage products. However, note that the interest rates that come with these products are higher than average at around 7%.

    Will I be eligible for a buy-to-let mortgage with a 15% deposit?

    If you’re hoping to secure a BTL mortgage with a low deposit, you will need to pass the lender’s buy-to-let eligibility criteria. The following (along with other factors) will be taken into consideration).

    • Your credit history
    • Your financial outgoings, including credit card monthly interest payments and other debts
    • Your age
    • The type of property you are looking to buy

    Of course, you will also need to find the right mortgage lender as very few offer 85% loan-to-value mortgages on buy-to-lets at the moment. As mortgage brokers, we can put you in touch with the lenders that will offer you a mortgage with a low deposit but if you want access to a wider range of mortgage deals, you might want to save up for a higher deposit.

    15% Buy To Let Deposit Mortgages

    Compare 15% buy-to-let mortgage products available in April 2024 below using our independent buy to let mortgage advice service, or view our table of leading deals below.

    Lender Initial Rate Rate Type Overall Cost for Comparison Product Fee Monthly Cost
    Vida Homeloans 6.64% 5 year fixed 9.1% APRC £5,100 £1744.15 per month
    Vida Homeloans 6.79% 5 year fixed 9.2% APRC £5,100 £1768.27 per month
    Vida Homeloans 6.94% 2 year fixed 10.1% APRC £5,100 £1792.54 per month
    Vida Homeloans 7.14% 2 year fixed 10.2% APRC £5,100 £1825.12 per month

    Representative Example: A repayment mortgage of £250,000 payable over 25 years, initially on a 5-year fixed rate at 6.84%, would require 60 monthly payments of £1,776.34. After 5 years, the mortgage would switch to the lender’s current variable rate. Assuming a variable rate of 7.84% for the remaining 20 years, this would involve 240 monthly payments at an estimated amount based on this rate.

    The total amount payable would be approximately £595,204.40, made up of the loan amount plus interest (£340,204.40), and a product fee of £5,100.

    In this example, the overall cost for comparison is 9.2% APRC representative.

    The interest rates and terms provided are subject to change based on market conditions and borrower eligibility. Always consult with the lender for the most current rates and terms.


    Begin Your Buy-to-Let Investment Journey
    Thinking of getting a buy-to-let mortgage? Let's make it happen! Reach out to us today for FREE expert guidance and a smooth, hassle-free process. Your ideal mortgage solution is just a conversation away.

    Preferred Buy To Let Property Deposits: What Lenders Accept

    Securing a mortgage on a buy-to-let property starts with identifying your deposit source, and it’s essential to provide proof of where this money comes from. You have several options to consider:

    • Personal Savings: The most straightforward source, representing your accumulated savings.
    • Inheritance: Funds or assets received from an inheritance.
    • Selling Another Property: Using the proceeds from the sale of a property you own.
    • Mortgaging Another Property: Raising funds by leveraging equity in another property.
    • Gifted Deposit: Money gifted to you, typically by family members.
    • Loan from Family: Borrowing from relatives, often under more flexible terms than banks.
    • Concessionary Purchase: Acquiring a property below its market value, often from family.
    • Redundancy Pay: Utilising funds received from a redundancy package.
    • Builder’s Deposit: Contributions or incentives offered by property developers.
    • Unsecured Loan: Though less common, using a personal loan for your deposit.

    Each of these sources comes with its own set of considerations and implications, so it’s important to choose the one that aligns best with your financial situation and investment strategy.

    The Link Between Your Deposit Size and Mortgage Rates

    Let’s talk about how the size of your deposit can play a big role in shaping your mortgage rate. If your deposit is on the smaller side, you might find yourself facing higher interest rates. It’s a bit like a seesaw – as your deposit decreases, your rate tends to go up. This happens because your options for lenders shrink, and those who are willing to lend may view your application as a bit more of a gamble, which they balance out with higher rates.

    But here’s a silver lining! Once you’ve sailed through your initial fixed-rate or discounted-rate period, the world of remortgaging opens up. If you’ve been savvy and saved some of that rental income, you can use for yourt Buy To Let remortgage at a lower loan-to-value (LTV) ratio. This move can be a game-changer, giving you access to a wider pool of lenders and potentially more attractive rates. It’s all about playing the long game and making your investment work smarter for you.

    Compare The Best Buy To Let Mortgage Rates

    Ready to start shopping for buy-to-let mortgages? The below tables compare the current best buy-to-let interest only mortgage rates as of 4th April 2024, designed to help you make an informed decision for your property investment journey.

    Please note that the rates shown in the tables below are based on a 70% loan-to-value (LTV) interest-only buy-to-let mortgage with a 25 year term. Keep in mind that actual rates are subject to change and may vary based on your personal circumstances, including your credit history, income, and the specific details of your property investment. We recommend consulting with our fee-free mortgage advisors to get the most accurate and up-to-date information tailored to your unique situation.

    The Best 2-Year Buy-To-Let Mortgages

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    Lender Initial Rate Initial Payment Reverting Rate Reverting Payment Total Fees Type APRC Total Cost
    Furness Building Society 5.09% £742.38 8.69% £1,267.44 £1,015 2 Year Fixed 8.0% £18,682
    The Mortgage Works 4.79% £698.54 8.99% £1,311.04 £1,855 2 Year Fixed 8.7% £18,710
    Bank of Ireland 5.22% £761.25 8.04% £1,172.50 £1,010 2 Year Fixed 7.9% £18,975
    Virgin Money 4.94% £720.42 9.69% £1,413.13 £1,775 2 Year Fixed 9.3% £19,164
    Leeds Building Society 5.34% £778.75 8.54% £1,245.42 £1,034 2 Year Fixed 8.1% £19,988

    The Best 3-Year Buy-To-Let Mortgages

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    Lender Initial Rate Initial Payment Reverting Rate Reverting Payment Total Fees Type APRC Total Cost
    BM Solutions 4.72% £688.33 9.59% £1,398.54 £0 3 Year Fixed 8.0% £27,980
    Virgin Money 5.04% £735.00 9.69% £1,413.13 £1,520 3 Year Fixed 8.3% £28,079
    Newbury Building Society 5.25% £765.63 7.00% £1,020.83 £1,225 3 Year Variable 6.9% £28,887
    Halifax 4.73% £689.79 9.59% £1,398.54 £0 3 Year Fixed 8.0% £30,082
    Accord Mortgages 5.44% £793.33 8.24% £1,201.67 £2,030 3 Year Fixed 7.5% £30,430

    The Best 5-Year Buy-To-Let Mortgages

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    Lender Initial Rate Initial Payment Reverting Rate Reverting Payment Total Fees Type APRC Total Cost
    BM Solutions 4.51% £657.71 9.59% £1,398.54 £1,499 5 Year Fixed 8.0% £40,662
    Barclays 4.60% £670.83 9.74% £1,420.42 £1,830 5 Year Fixed 8.1% £41,660
    The Mortgage Works 4.54% £662.08 8.99% £1,311.04 £1,855 5 Year Fixed 7.7% £41,670
    Virgin Money 4.22% £615.42 9.69% £1,413.13 £5,275 5 Year Fixed 8.2% £42,299
    Co-operative Bank 4.54% £662.08 8.12% £1,184.17 £1,999 5 Year Fixed 7.1% £43,074

    Find Your Best Buy-To-Let Mortgage Rate

    Use the tool below to fill in your financial details and find a mortgage product suited to you. Then get in touch with our fee-free buy-to-let mortgage team for advice and to secure your best buy-to-let mortgage deal.

    How Much Can I Borrow for a Buy-to-Let Mortgage?

    When it comes to buy-to-let mortgages, the amount you can borrow is closely tied to the expected rental income from the property. Lenders typically look for assurance that the rent you’ll earn will not only cover your mortgage monthly interest payments but also provide a comfortable margin.

    Understanding Rental Income, Rental Yields and Their Impact

    • Rental Income vs. Mortgage Payments: Most lenders require that the rental income be about 25–30% higher than your mortgage payment. This extra buffer helps ensure that you can manage the mortgage comfortably, even if there are unexpected expenses or vacancies.
    • Effect of Rental Valuation on LTV: If the property’s rental valuation falls short of expectations, it might affect the loan-to-value (LTV) ratio that your lender is willing to offer. In such cases, you might need to bring a larger deposit to the table.
    • Researching Rental Rates: To get a realistic idea of potential rental income, it’s wise to consult local letting agents or browse online rental listings. This research can give you a clearer picture of what similar properties in the area are renting for, helping you estimate your own property’s earning potential.

    If you’re keen on getting the numbers just right, a rental yield calculator can be your go-to tool. It’s a smart way to get a clear picture of your potential earnings, helping you navigate your buy-to-let decisions with confidence and ease.

    What do I do if my buy-to-let mortgage application is declined?

    Whether you’re investing in a buy-to-let for the first time or you are a portfolio landlord and have multiple properties, it can still be a nail-biting time when you’re waiting to hear back from the lender about your application.

    If your application is declined, there will usually be a good reason for this.

    Sometimes, your deposit could be an issue. If you haven’t been able to raise the deposit required, be that a high or a low deposit, the lender will reject your application if you haven’t met their set requirements.

    Other reasons why your application might be declined include:

    • Your projected monthly rental income might not be enough to cover the mortgage term
    • You might have a bad credit score
    • If you’re a frequent investor, you might have too much mortgage debt
    • You might not meet the lender’s age criteria – The minimum age for buy-to-let mortgages
    • The lender might not like the property type if it is a holiday let, student digs, or an HMO (house with multiple occupations)
    • You may be over the LTV threshold if you are a portfolio landlord
    • Your application could have been submitted with errors
    • You may have chosen the wrong lender

    If your application is declined, you will need to find out the reasons why. If your application was rejected because of one or more of the reasons above, then there are several steps you can take. For example:

    • Look for a property with a higher rental yield
    • Take steps to improve your credit score
    • Look for a lender with more flexibility regarding your age and portfolio
    • Consider a specialist mortgage, such as an HMO mortgage if you are buying that type of property.
    • Use the services of a mortgage broker – they will complete your application for you to eliminate the possibility of errors and they will let you know which lender is right for your personal circumstances

    Buy-To-Let Mortgage Specialist: YesCanDo Money

    Ready to start your buy-to-let mortgage journey? Let YesCanDo Money be your guide. Our fee-free mortgage experts are here to discuss lender deposit requirements and offer advice on funding your mortgage. With access to a wide array of lenders and deals, we aim to find you a mortgage that minimises your monthly costs and matches your situation.

    We focus on securing you a competitive interest rate that complements your property’s rental income. With over 25 years in the field, we’re equipped to answer your questions about everything from whether you will need to pay income tax or capital gains tax and help you calculate essential costs like buy to let stamp duty.

    Need more info on buy-to-let mortgages or advice on other mortgage-related topics? Reach out to our team or explore our comprehensive guides for insights tailored to your property investment needs.

    Check out our other buy-to-let mortgage advice guides for further information on buy-to-let mortgages, as well as info about residential mortgages, mortgage types, and a range of other related topics.

    Begin Your Buy-to-Let Investment Journey
    Thinking of getting a buy-to-let mortgage? Let's make it happen! Reach out to us today for FREE expert guidance and a smooth, hassle-free process. Your ideal mortgage solution is just a conversation away.

    Buy-to-Let Mortgage FAQs: Quick Answers to Your Key Questions

    Navigating the world of buy-to-let mortgages can be full of queries. Here are some of the most frequently asked questions, answered succinctly to give you the clarity you need.

    It's rare to find buy-to-let mortgages with only a 10% deposit, as most lenders typically require at least 20-25%.

    Some lenders may offer buy-to-let mortgages with a 15% deposit, but these are less common and might come with higher interest rates.

    The minimum deposit for let-to-buy mortgage is usually around 25%, but it can vary depending on the lender and the property.

    Getting a buy-to-let mortgage can be challenging, as it often requires a higher deposit and stricter affordability checks compared to residential mortgages.

    Typically, you need a deposit of 20-25% for a buy-to-let mortgage, though this can vary based on the lender and your circumstances.

    A 10% deposit for buy-to-let is generally not accepted by most lenders; a higher deposit is usually required.

    The deposit rate for buy-to-let mortgages usually ranges from 20% to 25%, but it can be higher for certain properties or borrowers.

    The lowest mortgage deposit for residential properties can be as low as 5%, but for buy-to-let, it's typically around 20-25%.

    For residential mortgages, it's possible to buy a house with a 5% deposit, but for buy-to-let, the deposit requirements are usually higher.

    100% mortgages are extremely rare and typically not available for buy-to-let properties. They usually require additional security, like a guarantor.

    For a residential mortgage, a 10 percent deposit is often acceptable, but for buy-to-let, lenders usually ask for a larger deposit.

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    Tom Blackler (CeMAP)
    Tom Blackler (CeMAP)

    Tom CeMAP is a committed Mortgage & Protection Adviser at YesCanDo Money. With his extensive industry knowledge and client-centric approach, he excels in assisting clients, be they first-time buyers, seasoned home movers, or buy-to-let enthusiasts. Tom's dedication to securing the best mortgage deals and ensuring clients' financial well-being truly distinguishes him in the field.

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