20% Buy to Let Mortgage
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20% Buy to Let Mortgage
Adam Nunn and Jon Porter talk to us about 20% Buy to Let mortgages.
Can you get a 20% Buy to Let mortgage?
We’ve done podcasts before stating that a 75% Buy to Let mortgage is the general rule of thumb, but we have started to see more lenders introducing Loan to Values of 80% on Buy to Let, which means a 20% deposit.
There’s more of this now because of ever-changing government policies, which have been impacting current and prospective investors.
Introducing a higher Loan to Value eases the criteria in buying a new property, considering the additional property stamp duty which, as of today in March 2025, is now 5%.
Who is eligible for a 20% Buy to Let mortgage? What criteria do I need to meet?
It’s open to most landlords or future landlords – including first-timers. If you already own a home or have done previously, typically more lenders will be available to you.
You can still be considered if you’re a First Time Buyer and first-time landlord, but there might be more criteria to go through regarding whether you can afford the mortgage personally. Your income can be taken into consideration under that scenario, rather than just the rental calculator that lenders use.
You can be a portfolio landlord, too. The key area where lenders don’t tend to like to do a lower deposit is for higher risk letting arrangements such as a House in Multiple Occupancy (HMO).
Do many lenders offer 20% Buy to Let mortgages?
We’ve had a look this morning, in March 2025, and I noted around 20 lenders were offering 80% Loan to Value mortgages. The number of lenders that are now doing this Loan to Value for Buy to Lets is certainly increasing.
How does a 20% deposit affect the mortgage terms?
As with any mortgage that’s got a higher Loan to Value, the interest rate can be higher, and so too can the associated fees. It can also be more difficult with regards to the rental stress test, and that could influence how much you can borrow.
So it’s about doing the right equations for it – because it can be a little bit more difficult. It’s feasible, but not in every circumstance.
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How much can you borrow with a 20% or low deposit Buy to Let mortgage?
With a 20% deposit, you borrow 80% of the property value – and that’s then subject to the rental stress test we explained.
But behind the scenes, lenders also have limits. To give you an example, with one of the lenders I’ve looked at this morning, if you borrow 80% of the property value for a Buy to Let, they won’t lend more than £750,000.
That’s quite a significant sum of money and hopefully does give people options. There will be buyers out there looking at million pound properties, but for them we’d look at lenders who have higher maximum lending limits.
What if I’m self-employed? Can I get a 20% Buy to Let mortgage?
There’s no difference. You can as long as you meet the lender’s minimum income and self-employed criteria. There’s no difference between the 20% or 25% product if you’re self-employed, for the majority of the lenders.
Can you get a 20% Buy to Let mortgage if you have bad credit?
Potentially – it always depends on the severity of the credit history and the type of bad credit. It’s never a straightforward answer, but potentially some lenders will consider it.
It’s crucial, of course, that before we start our research, we obtain a copy of your credit report to fully understand that credit history. Then we can go about finding the right lender for you.
What other costs are involved here with a 20% Buy to Let mortgage?
There are no additional costs involved specifically for an 80% Loan to Value, 20% deposit mortgage. There are just the standard associated fees: stamp duty, solicitor costs, surveyor’s costs, broker fee and product fees.
How do I apply for a Buy to Let mortgage with a 20% deposit?
The process is no different to any other buy to let mortgage application. You might have some different requirements and might have to provide a tenancy agreement – especially if it’s already let out. You might have to provide rental appraisals from registered letting agents.
Speak to someone like ourselves. We’ll place you with the most appropriate lender for your requirements, sourcing you the most cost-effective rate for your situation.
How can a mortgage broker help here? Is there anything else we need to know?
It’s basically seeing whether this is right for you. We go through your individual scenario and the property you’re looking at to see whether a 80% Loan to Value mortgage is appropriate.
I keep saying Loan to Value – I apologise. That’s lenders’ talk, but it’s just the reverse of the 20% deposit. But yes, just speak to a broker. That’s key.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
