The amount you can borrow on a buy-to-let mortgage is usually determined by two principal factors:
As a new landlord, the amount you can borrow will almost certainly be linked to the rental income you expect to receive from the property once it is tenanted. It is therefore useful to investigate the realistic rental prices for the type of property in the area it is located.
Lenders often prefer the rental income to exceed the mortgage payment by around a quarter, as a proportion of this rental income is expected to go towards costs such as maintenance, insurance, and agents’ fees. (Find out more on our buy-to-let mortgage page.)
The amount that you can borrow is also normally limited to a maximum of 75% of the property value, which is more restrictive than most other mortgage types. Landlord mortgages usually require a deposit of at least 25%. Only experienced landlords are likely to receive a concession on this.
This might affect the rent you need to charge to make the property affordable. Check out our calculator 'how much rent to charge' for more details.
As always, we recommend that you seek professional advice if you are unsure which type of mortgage is right for you and that all of the information provided above is for use as an overview only and should not be the basis for your mortgage decision.