Buy-to-Let Mortgage FAQ
General information only. This is not financial advice.
Last reviewed: 2026-06-06
How does interest coverage ratio (ICR) work for a buy-to-let mortgage?
The interest coverage ratio (ICR) measures whether rental income covers the mortgage interest, plus a safety buffer. Most lenders require rent to equal at least 125% of the monthly interest payment at a stressed rate (typically 5–5.5%). Higher-rate taxpayers and portfolio landlords often face a 145% requirement. If the stressed monthly interest is £800, the lender needs rent of at least £1,000 (125%) or £1,160 (145%). Falling below the ICR threshold can reduce the loan amount or block the application entirely.
What is a portfolio landlord, and how does it affect my mortgage?
The Prudential Regulation Authority (PRA) defines a portfolio landlord as someone with four or more mortgaged buy-to-let properties. Portfolio landlords face more rigorous underwriting: lenders must assess the entire portfolio's affordability and cash flow, not just the property being purchased. You will typically need to provide mortgage statements, tenancy agreements, and a rental schedule across all properties. Some lenders specialise in portfolio cases; others restrict them. A specialist broker can match you with lenders suited to your portfolio size and structure.
Should I hold a buy-to-let in a limited company or in my own name?
A limited company (SPV) structure allows mortgage interest to be deducted as a business expense — a tax advantage lost to personal landlords after the Section 24 changes phased out interest relief for higher-rate taxpayers. However, extracting profits via dividends incurs corporation tax then dividend tax. Whether a limited company is more efficient depends on your overall income, how you plan to use rental profits, and your long-term portfolio goals. A specialist mortgage broker can show you the lenders and rates available for each structure; a qualified tax adviser should guide the ownership decision itself.
Can I get a mortgage on an HMO property?
Yes — but HMOs require specialist lenders, as mainstream buy-to-let lenders typically exclude them. Key factors include whether the property requires a mandatory HMO licence (required for five or more occupants in most councils, and sometimes for smaller HMOs in selective licensing areas), the number of rooms, and the conversion type. HMO lenders assess rental income room-by-room rather than from a single tenancy. Maximum LTV is often 75%, and some lenders require prior landlord experience for HMO lending.
How much deposit do I need for a buy-to-let mortgage?
Most buy-to-let lenders require a minimum 25% deposit (75% LTV). A 25–40% deposit gives the widest lender choice and the most competitive rates. For HMOs, multi-unit freehold blocks, or portfolio lending, many lenders require 30–35% minimum. First-time landlords may face higher deposit requirements or be excluded from certain lenders. This is illustrative — actual requirements vary by lender, property type, and your individual circumstances.
Can I get a buy-to-let mortgage as a first-time buyer?
Yes. Some lenders offer buy-to-let mortgages to first-time buyers, though the available pool is smaller than for existing homeowners. You may face stricter ICR requirements or a higher minimum deposit. The most common scenario is a first-time buyer investing in a buy-to-let while living with family — lenders want to see a credible rationale for why you are investing before buying your own home. A broker can identify which lenders actively accept first-time buyer landlords.
Risk warning
Your home may be repossessed if you do not keep up repayments on your mortgage. Buy-to-let mortgages are not regulated by the Financial Conduct Authority.
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