Buy to Let Mortgage Criteria Explained

Buy to let properties are seen by all mortgage lenders as nothing more than an investment, and as an investment lenders have to know you are not putting their money at risk. For this reason all buy to let mortgages come with a list of criteria that you as a property investor have to meet. Some buy to let mortgage providers are a bit more lenient than others but you may find they charge a slightly higher interest rate in the process.

Common criteria you will have to meet for a buy to let mortgage

Every buy to let mortgage lender that offers a range of buy to let mortgages (and not all of them do) will have their own qualifying conditions. In general though, the lending criteria are as follows:

  •  You need a minimum personal income of no less than £25,000 per annum before tax, not including the rental income you’ll get from the buy to let property you intend to buy. Some lenders specify a larger income of no less than £35,000 per annum however this can be a joint income for you and a partner.
  •  You need to be at least 25 years of age at the start of the mortgage term and no more than 75 years of age at the end of the mortgage term. So for example, to qualify for a 15 year buy to let mortgage you can’t be older than 60 when you apply.
  •  You will need a deposit of at least 25% of the property value or selling price, whichever is lower. For new builds this deposit can increase up to 35% with some mortgage lenders.
  •  The big mortgage lenders i.e. the banks and building societies, specify you can’t have more than 3 buy to let mortgage products at any one time, or more than £2million worth of loans with them.
  •  Banks and building societies will probably also need confirmation that the annual rental income from the property is equal to or in excess of 125% of the annual buy to let mortgage payments based on your chosen mortgage deal.   
  •  Some lenders will only approve a buy to let mortgage if you can prove it isn’t your first mortgage. A personal mortgage used to buy your home can be used as proof.
  •  The property you intend to buy has to be in a rentable condition i.e. not subdivided into units, and it has to be bought for the sole purpose of renting out. Using a buy to let mortgage to purchase a family home is not allowed.   

In addition to the requirements outlined above you will also have to meet the standard criteria for a mortgage. This said, it isn’t difficult to qualify for  buy to let mortgages providing you research the market and find a mortgage lender whose criteria you can comfortably satisfy.