Buy To Let Mortgage Deposits

How much deposit do you need for a buy to let mortgage?

How much deposit do you need for a buy to let mortgage?

The amount you can borrow on a Buy to Let mortgage is based on the monthly rent.

Most buy to let lenders will require you to put down 25% as a minimum deposit. This is 25% of the property purchase price or valuation. Some lenders may require a deposit as large as 40%.

It is possible to get a buy to let mortgage with a deposit of just 15%. However, the interest rates are higher and there’s fewer lenders and mortgage deals to choose from.

With a 25% deposit you will have a decent choice of lenders and mortgage deals for your investment property.

For a buy to let remortgage this means you need equity of 25-40% of the property value.

So how much could you borrow?

The amount you can borrow with a buy to let mortgage is very different to a standard residential mortgage. While the lenders are interested in your own earnings, they are much more interested in the earnings (ie the rent) that your property can generate.

As with any other mortgage, your deposit will affect how much you can borrow, as this will affect the loan to value %.

If you want to borrow £150,000 against a buy to let property valued at £200,000, this equates to a LTV of 75%.

In addition to the LTV ratio, most lenders will also set a minimum ‘rental cover calculation’ which is generally set at 125% (or 145%) of the monthly mortgage interest payments.

So for a mortgage repayment of £1000 you will need to demonstrate rental income of at least £1250 per month.

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I recently worked with a mortgage advisor Kerry who was exceptional. She was knowledgeable, responsive, and provided excellent customer service. I highly recommend Drake Mortgages to anyone in need of mortgage guidance and support. Thank you for making my experience stress-free and straightforward!

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Thank you so very much for your help. We have finally completed on our purchase. At last we got there. Your assistance was invaluable.

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Muswell Hill, London N10
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Really knowledgeable and friendly service. Communication and speed of responses was excellent. Thank you.

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We had a fantastic experience with Drake Mortgages. My partner and I are first time buyers and both pretty clueless so it was really helpful to have Kerry Santucci explaining the different features of different mortgages and finding the best one for us. Thoroughly recommend her and the rest of the team at Drake Mortgages.

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Kerry has been an invaluable resource for us not once, but twice over the past five years, assisting us with both our initial mortgage and subsequent remortgage. Kerry's expertise and knowledge are truly commendable.

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