How lenders decide
Instead of salary multiples, lenders check the rent covers the mortgage interest with a margin, at a stressed interest rate. Basic-rate taxpayers and limited companies are commonly tested at 125%, higher-rate taxpayers at 145%. Five-year fixes are often tested at a lower rate than shorter fixes. Try the buy-to-let mortgage calculator.
Interest-only or repayment?
Interest-only keeps payments low and is the norm, but you must repay the loan at the end, usually by selling or refinancing. Repayment costs more each month but clears the debt.
| £150,000 at 5% over 25 years | Monthly payment |
|---|---|
| Interest-only | £625 |
| Repayment | £877 |
Personal name or limited company?
Company mortgages often carry slightly higher rates and fees, but the rent test is usually 125% and interest is fully deductible for corporation tax. See limited company vs personal ownership.
Fees to budget for
- Arrangement or product fee.
- Valuation and legal fees.
- Broker fee, if charged.
- Stamp Duty, including the 5% surcharge.
Frequently asked questions
Can a first-time buyer get a buy-to-let mortgage?
Some lenders accept first-time buyers, usually with stricter criteria and a personal income requirement.
Sources
- GOV.UK: Tax relief for residential landlords, how it's worked out
- GOV.UK: Stamp Duty Land Tax residential property rates
- GOV.UK: Corporation Tax rates
Sources last checked 10 November 2026. See all our sources and how we keep pages up to date.