Buy-to-Let Mortgages

Buy-to-let mortgages are designed for clients purchasing a property as an investment rather than as their main home. This can be done in your personal name or through a limited company, depending on your circumstances and tax position. The mortgage is usually assessed on the expected rental income from the property, alongside standard affordability and criteria checks.

At Lewis Christopher we provide buy-to-let mortgage advice for landlords across Milton Keynes, Buckinghamshire and further afield, from first-time landlords buying a single property through to portfolio landlords managing multiple holdings. We also work alongside Limestone, our lettings and property management company, so you can look at both the borrowing and the letting side of an investment in one place.

Lenders will typically offer buy-to-let mortgages up to a percentage of the property's value, with many working around loan-to-value ranges such as 75%, and some going higher in certain situations. The exact options available will depend on the property, your overall financial position and the lender's criteria at the time.

In practice that usually means a deposit of at least 25% of the purchase price, although the figure varies between lenders and property types. Most buy-to-let mortgages are arranged on an interest-only basis, so the monthly payment covers the interest and the original loan is repaid separately, often from the eventual sale of the property or from other assets.

Unlike a residential mortgage, borrowing on a buy-to-let is driven mainly by the rent the property is expected to achieve rather than by your personal income. Lenders apply an interest cover ratio, testing whether the projected rent comfortably exceeds the mortgage interest at a stressed rate rather than the rate you will actually pay.

As a general guide, lenders often look for rental income of around 125% of the stressed mortgage interest for basic rate taxpayers and limited companies, rising to roughly 145% to 160% for higher rate taxpayers. Stress rates commonly sit between 5.5% and 8%, with longer fixed rate products sometimes assessed more generously. These figures vary between lenders and change over time, so the borrowing available on the same property can differ significantly depending on which lender you approach.

A growing number of landlords hold investment property through a limited company, often a special purpose vehicle set up specifically for the purpose. The main driver is the treatment of mortgage interest. Since the 2020/21 tax year, individual landlords can no longer deduct mortgage interest and other finance costs from rental income to calculate taxable profit and instead receive a tax credit at the basic rate of 20%, irrespective of their own tax band. Limited companies are treated differently and can still deduct mortgage interest and finance costs as a business expense before calculating Corporation Tax.

That does not automatically make a limited company the right answer. Company buy-to-let mortgages can carry higher rates and fees, moving an existing property into a company can trigger stamp duty and capital gains tax, and there are ongoing costs to running a company. The right structure depends on your tax position, how long you intend to hold the property and what you plan to do with the income. We would always recommend taking advice from an accountant or tax adviser alongside the mortgage advice.

If you are buying your first investment property, lenders will look at more than the rental figures. Many require you to already own your own home, and some set minimum income requirements alongside the rental cover test. Criteria vary widely, and a first-time landlord declined by one lender may be perfectly acceptable to another. We help you identify the lenders most likely to suit your circumstances before an application is submitted.

Landlords with four or more mortgaged buy-to-let properties are treated as portfolio landlords, which brings additional underwriting. Lenders will usually assess the portfolio as a whole rather than the property in isolation, looking at aggregate rental cover, overall borrowing across the portfolio and, in many cases, a business plan and cashflow forecast. Preparation matters here, and we help you present the portfolio in the way lenders expect to see it.

There is also a market for buy-to-let remortgages, where you may choose to refinance an existing investment property. This can be used to secure a new rate, restructure borrowing or release equity for other purposes, such as further property purchases or wider business plans. Where staying with your existing lender makes more sense, a product transfer may be the simpler route.

We help you understand the choices, compare the numbers and put in place a buy-to-let mortgage that aligns with your investment objectives and risk profile.