You need a minimum 25% deposit, your expected rent must cover 125–145% of the mortgage payment at a stressed rate of around 5.5%, and most BTL mortgages are interest-only. Those are the three things lenders care about most.
Here's how the assessment actually works, and the specific numbers that determine whether a deal stacks up.
How lenders assess affordability
Residential mortgages are assessed on your salary. BTL mortgages are assessed on rental income. This catches some first-time investors off guard — your personal income is largely irrelevant to the lending decision.
Most lenders require the expected monthly rent to cover 125% to 145% of the monthly mortgage payment. Crucially, that calculation uses a stressed interest rate, not the actual product rate you'll be paying. Stress rates currently sit around 5.5% for basic rate taxpayers and can be higher for higher rate taxpayers.
Worked example: Property worth £200,000, 75% LTV mortgage of £150,000, stressed at 5.5%. The monthly interest at 5.5% on £150,000 is £687.50. At a 145% coverage ratio, the lender needs to see monthly rent of at least £997.
If the market rent for that property is only £850 per month, most lenders would reject the application — even if the actual mortgage rate is 4.5% and the real monthly payment is much lower. I've seen deals fall over specifically because of this gap between actual rates and stress-test rates. It's worth running the numbers before you commit to a purchase.
Deposit requirements
The minimum deposit for most BTL lenders is 25% (75% loan-to-value). Some specialist lenders accept 20%, but with higher rates and stricter criteria. A few accept 15% on specific products, though these are rare.
Higher deposits (30–40%) unlock better interest rates and more product choice. From what I've seen in the current market, the rate improvement between 75% and 60% LTV can be significant — sometimes 0.5% or more.
Interest-only vs repayment
The majority of BTL mortgages are interest-only. You pay the interest each month and owe the full loan amount at the end of the term. Monthly payments are lower, which helps rental cashflow, but you need a plan to repay the capital — typically by selling the property or remortgaging.
Repayment BTL mortgages are available. Monthly payments are higher, but you reduce the debt over time and own the property outright at the end of the term.
Portfolio landlord rules
Since 2017, the Prudential Regulation Authority requires lenders to apply additional scrutiny to portfolio landlords — defined as anyone with four or more mortgaged properties. Some lenders set the threshold at three.
Portfolio landlord applications typically require details of your entire portfolio: property values, rental income, mortgage balances, and a business plan. Expect longer processing times and more documentation.
Limited company BTL
Buying through a limited company has become increasingly common since Section 24 restricted mortgage interest relief for individual landlords. Company BTL products charge higher rates than personal ones — typically 0.5–1% more — but the tax treatment can be more favourable for higher rate taxpayers.
See our limited company BTL mortgage guide for a detailed comparison.
Current rates
BTL mortgage rates change frequently. As of early 2026, fixed rates for 75% LTV products range from approximately 4.0% to 5.5% depending on the lender, term, and whether the borrower is an individual or company.
Check broker comparison sites for live rates. We do not recommend specific products or lenders.