This article is for general information only and does not constitute financial advice. Speak to a mortgage broker about your circumstances.
The standard route to funding a first BTL purchase is a buy-to-let mortgage with a minimum 25% deposit. Lenders assess the deal based on the expected rental income, not your personal salary (though some have minimum income requirements). The rental income must cover the mortgage payment by a margin, typically 125% to 145%, at a stress-test interest rate of 5.5% to 6.5%.
On a £200,000 property with a 75% LTV mortgage of £150,000 at a stress rate of 5.5%, the annual mortgage cost is £8,250. At a 125% coverage ratio, the minimum annual rent required is £10,312, or £859 per month. If the property achieves that rent, the lender will consider the deal.
Deposit requirements
Most BTL lenders require a minimum 25% deposit (75% LTV). Some offer 80% or 85% LTV products, but rates are higher and the choice of lenders narrows.
On a £200,000 property at 75% LTV, the deposit is £50,000. Add stamp duty (approximately £8,500 at current surcharge rates), legal fees (£1,000 to £2,000), and survey costs (£300 to £600). Total cash required: approximately £60,000 to £62,000.
Where the deposit comes from
Savings. The straightforward route. No complications.
Equity release from your main home. If you own a residential property with significant equity, you can remortgage to release cash for the BTL deposit. The remortgage adds to your monthly residential mortgage payments, so the numbers need to work across both properties.
Gifted deposit. Some lenders accept gifted deposits from family members. A signed letter confirming the gift is not repayable is usually required.
Bridging finance. For auction purchases or properties that need work before a BTL lender will touch them. The bridge covers the full purchase price, you refurbish, then refinance onto a BTL mortgage. This is the BRRRR approach.
Lender criteria
BTL lenders assess three things: the property, the rental income, and the borrower.
Property. Standard construction (brick and tile), minimum value of £50,000 to £75,000 (varies by lender), habitable condition, EPC of E or above. Non-standard construction, ex-council properties, and flats above commercial premises may require specialist lenders.
Rental income. The expected monthly rent must meet the lender's interest coverage ratio (ICR). For personal-name borrowers at basic rate tax, the typical ICR is 125% at a stress rate of 5.5%. For higher-rate taxpayers, some lenders require 145% at 5.5%.
Borrower. Most lenders require a minimum age of 21 and maximum of 75 to 85 at the end of the mortgage term. Many require the borrower to already own a residential property (not always the case for first-time BTL buyers who are also first-time buyers). Some lenders require minimum personal income of £25,000, while others have no minimum.
Personal name vs limited company
If you are a higher-rate (40%) or additional-rate (45%) taxpayer, buying through a limited company (SPV) avoids the full impact of Section 24, which restricts mortgage interest relief for personal-name landlords. Corporation tax on rental profits is 19% to 25%, and mortgage interest remains a deductible expense within a company structure.
Limited company BTL mortgages carry slightly higher interest rates (0.2% to 0.5% above personal-name products) and additional running costs (accountancy fees, Companies House filing). See our limited company guide for a full comparison.
Use a broker
BTL mortgage products change frequently, and lender criteria vary. A specialist BTL broker has access to the full market (including lenders not available directly) and can match your circumstances to the right product. Broker fees are typically £300 to £500, and some operate on a fee-free basis with commission from the lender.
For a first-time BTL application, a broker is worth the cost.
Sources
- UK Finance. https://www.ukfinance.org.uk/ [Accessed 6 May 2026]