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Buy to let mortgages: lending criteria



Buy to let mortgages: lending criteria

Buy to Let is now invested in by hundreds of thousands of people in the UK

Some investors would view this type of asset as a safer investment than putting their money into stocks and shares and would also hope to obtain a greater investment return than if the monies were merely left in an instant access savings account or fixed rate bond.

here are various ways that the purchase of an investment property can be funded. Although some property investors will be in the fortunate position to be able to pay cash there are many people that would need to borrow monies to help fund the purchase. There are a number of lending options available but the most popular choice is a buy-to-let mortgage.

Buy-to-Let mortgages are available from numerous lenders such as the large high street banks and building societies, the Post Office and some other specialist lenders.

Lending Criteria

Let’s have a look at some of the main lending criteria for buy-to-let mortgages but do remember that some of the criteria mentioned below will vary between the different lenders.

Who can apply?

An applicant should be resident in the UK, a homeowner, over the age of 21 and at least one of the applicants may require a minimum earned income of say £25,000. The applicant should not be older than say 80 when the borrowing is cleared. Applicants should normally have a good credit rating although some lenders may consider applications from people with less than satisfactory credit histories. Some lenders will consider applications from limited companies.

Where do I look?

Buy-to-let mortgages are available from high-street lenders such as Lloyds and Natwest but can also be classified as 'commercial mortgages'. This opens newer and often more competitive options to obtain even lower rates and better LTV. One of the leading specialists in commercial mortgages is Commercial Mortgage Link who offer a 'whole of market' including some of the best rates and LTV's available.

How much can be borrowed?

The minimum amount is often £25,000 and a maximum amount may be up to £750,000 per property. However, some lenders will permit a customer to have as many as say 5 buy-to-let mortgages on 5 different investment properties subject to an overall maximum borrowing level that could be say £2 million spread across all lenders.

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Over what term can the borrowing be repaid?

The minimum term may be 5 years and the maximum term may be 30 years.

Buy-to-let mortgages may either be repayable on a capital and interest repayment basis or an interest only basis or a combination.


The lender will make an assessment to establish whether a customer can afford to repay the buy-to-let mortgage with one of the criteria being that the rental income should be a minimum of 125% of the mortgage repayment with the lender using an assumed interest rate to allow for increases in interest rates up to a certain level during the term of the borrowing. Other mortgage and unsecured debt are taken into account in conjunction with earned income.  

How much does a customer have to contribute?

A lender will normally consider lending up to 75% of the valuation so a customer will have to find the remainder.

What sort of property may be purchased to rent out?

The property must be in the UK and may be freehold or leasehold and could be a house, bungalow or flat. However, there are a number of restrictions as to the type of property so it is best to check with the lender before committing to the purchase.


The lender will usually require a minimum of a first legal charge over the investment property to be mortgaged.

Are there any fees?

There are a range of fees that may include the likes of an arrangement fee, valuation fee and legal fee.


With so many financial institutions offering buy-to-let mortgages and having slightly different lending criteria it is important that the customer identifies a lender that is a “perfect match” to whom an application can be submitted. In this respect, a customer could do there own research to try to find a suitable lender but this could be time consuming.

Using a broker or comparison website is also a possible way of sourcing such finance and, by using such, the customer can be put in touch with an experienced, specialist finance broker who has an extensive panel of buy-to-let mortgage lenders at their disposal, can provide impartial, sound guidance as well as identify a suitable lender and assist in submitting the application and supporting documentation.

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