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There is no single “best” buy-to-let mortgage for every landlord; the right choice depends on whether you’re buying in your personal name or through a limited company, how many properties you already own, and whether you want lower monthly payments or the fastest route to full ownership. For most landlords buying a standard residential rental property, a five-year fixed-rate buy-to-let mortgage on an interest-only basis offers the best balance of payment stability and cash flow, provided the property passes the lender’s rental income stress test (typically 125%–145% interest cover). Higher-rate taxpayers and anyone planning to build a portfolio are usually better off buying through a limited company, where mortgage interest remains fully deductible against rental profits. The right answer always comes down to your personal tax position, so speaking to a specialist accountant before you apply is the safest first step.
A fixed rate keeps your monthly mortgage payments the same for an agreed period.
A variable rate can go up or down during your mortgage term.
Tracker mortgages usually follow the Bank of England Base Rate.
Variable rates may be cheaper if interest rates fall, but your payments could increase if rates rise.
The best option depends on your circumstances, budget and attitude to risk.
How HTG Mortgages Can Help
At HTG Mortgages, I work with over 120 lenders across the UK, meaning we have access to a wide range of mortgage products to suit all types of borrowers. Whether you’re a first-time buyer or looking to remortgage, we can help you determine how much you can borrow and find the right mortgage for your circumstances.
We also provide ongoing support, regularly checking your options after your mortgage is secured, ensuring that you never miss out on a lower rate.
How HTG Helped a Landlord Grow to 5 Properties in 3 Years
One HTG client came to us in 2023 with a single buy-to-let flat in Greater Manchester, a full-time job, and a vague ambition to “do more with property.” He was a higher-rate taxpayer, which meant every rental property he bought in his own name would be stress-tested at 145% and hit with the full loss of higher-rate mortgage interest relief under Section 24.
We restructured his approach from the outset. Rather than buying property by property in his personal name, we set him up with a special purpose vehicle (SPV) limited company and secured a limited company buy-to-let mortgage for his second purchase, keeping mortgage interest fully deductible against rental income. We then used a remortgage on his first property to release equity for a deposit on the third, and helped him choose two-year fixed products on the earlier purchases so he could review and remortgage as each one matured, recycling equity as values grew.
Three years and five properties later, his portfolio spans a mix of standard buy-to-lets and one HMO conversion, and he now qualifies as a portfolio landlord, which opened access to specialist lenders offering more competitive rates on his overall borrowing. His average loan-to-value across the portfolio sits comfortably below lender caps, and his limited company structure has kept his tax bill materially lower than it would have been buying in his own name. This is a genuine example of how the right mortgage structure, not just the cheapest rate, is what actually lets a landlord scale.
What is the best type of mortgage for a rental property in the UK?
For most UK landlords, a fixed-rate buy-to-let mortgage on an interest-only basis is the most popular and often the most practical choice. Buy-to-let mortgages differ from residential mortgages because lenders assess them primarily on the rental income the property can generate rather than your personal salary alone, using an Interest Coverage Ratio (ICR) that typically requires rental income to be 125%–145% of a stressed mortgage payment.
Fixed-rate products (two, five, and increasingly ten-year fixes) are the most commonly chosen buy-to-let mortgage products because they provide payment certainty in a market where the Bank of England base rate has moved considerably over recent years. Five-year fixes are particularly popular among landlords because many lenders apply a lower stress rate to five-year products than to two-year deals, which can significantly increase your maximum borrowing. Tracker and discount variable rate mortgages exist too and can suit landlords comfortable with payment fluctuation in exchange for potentially lower rates during periods when the base rate is falling, but they carry more risk if rates rise again.
The “best” mortgage ultimately depends on your goals: capital growth investors who want to minimise monthly outgoings usually choose interest-only fixed-rate products, while landlords focused on eventually owning the property outright may choose repayment buy-to-let mortgages, even though these are less common. Because criteria and pricing vary enormously between the roughly 200 buy-to-let lenders in the UK market, comparing whole-of-market options with a specialist buy-to-let broker is the most reliable way to identify the best mortgage for your specific circumstances.
How much deposit do I need for a buy-to-let mortgage?
Most buy-to-let lenders require a minimum deposit of 20%–25% of the property’s value, meaning a maximum loan-to-value (LTV) of 75%–80%. This is significantly higher than the deposit typically required for a residential mortgage, reflecting the higher risk lenders attach to rental properties. Some specialist lenders will go up to 85% LTV, but these products usually carry a rate premium and stricter rental income requirements.
The deposit size directly affects both the interest rate you’re offered and your monthly rental stress test pass rate. A larger deposit, 35% or 40%, for example, typically gets you the most competitive buy-to-let mortgage rates on the market and makes it easier for the property to pass the lender’s ICR calculation, because a smaller loan means a lower monthly interest figure to cover. First-time landlords are sometimes restricted to lower maximum LTVs (often 75%) by lenders who see them as higher risk, and first-time buyers wanting a buy-to-let as their first ever mortgage face an even narrower pool of willing lenders. If you’re remortgaging an existing rental property to release equity for a deposit on your next purchase, lenders will still apply the same LTV caps and rental cover tests to the property you’re releasing funds from.
Should I buy a rental property in my personal name or through a limited company?
This is one of the most consequential decisions a UK landlord makes, and it should be driven by tax position, growth plans, and long-term strategy rather than rate alone. Since the phased withdrawal of mortgage interest tax relief for individual landlords was completed under Section 24 of the Finance Act, landlords who own property in their personal name can no longer deduct mortgage interest from rental income before calculating tax; instead, they receive a flat 20% tax credit on interest paid. For higher-rate (40%) and additional-rate (45%) taxpayers, this can substantially increase the effective tax paid on rental profits.
Buying through a limited company, usually a Special Purpose Vehicle (SPV) set up specifically to hold property, sidesteps this problem because companies pay corporation tax on profits after deducting mortgage interest as a business expense in full. Limited company buy-to-let mortgages have grown enormously in popularity as a result, and lender choice in this space has expanded significantly, though rates are sometimes marginally higher than personal-name equivalents and product fees can be higher too. Company structures also make it easier to bring in family members as shareholders for succession planning and can simplify passing property wealth to the next generation. On the other hand, extracting profit from a limited company (via dividends or salary) creates its own tax considerations, and lenders will often require personal guarantees from directors regardless of the company structure. Because the right answer depends on your income tax band, how many properties you plan to hold, and your exit strategy, this decision should always be made alongside both a specialist mortgage broker and an accountant.
I have also written a separate guide on finding the best buy to let mortgage for your circumstances.
Speak to an expert
Whether you’re buying your first home, moving house or remortgaging, HTG Mortgages is here to make the process as simple and stress-free as possible. I’ll compare mortgages from over 120 lenders, guide you every step of the way and help you find the right mortgage for your circumstances.
How do lenders calculate how much I can borrow for a buy-to-let mortgage?
Buy-to-let affordability is calculated differently from a residential mortgage. Rather than focusing primarily on your income and outgoings, lenders apply an Interest Coverage Ratio (ICR) test to the property itself. This means they calculate the monthly rental income the property is expected to achieve and check it against a “stressed” monthly mortgage payment, usually calculated using a notional interest rate of around 5.5%–6.5%, regardless of the actual rate on your chosen product, to build in a buffer against future rate rises.
Basic-rate taxpayers and limited companies are typically stress-tested at 125% rental cover, while higher-rate and additional-rate taxpayers are usually tested at 145%, reflecting their higher personal tax liability on rental income. As an example, if your stressed monthly interest payment would be £1,000, a basic-rate taxpayer would need rental income of at least £1,250, while a higher-rate taxpayer would need £1,450. Many lenders also apply a minimum personal income requirement (often £25,000 per year) for landlords buying in their own name, though this requirement is usually waived for limited company applications and experienced portfolio landlords. Because ICR calculations vary between lenders, some use more favourable stress rates for five-year fixed products, for example, the maximum loan amount for the exact same property can differ substantially from one lender to the next, which is why shopping around genuinely changes outcomes for landlords.
What’s the difference between interest-only and repayment buy-to-let mortgages?
With an interest-only buy-to-let mortgage, your monthly payments cover only the interest charged on the loan, and the full capital balance remains outstanding until the end of the mortgage term, at which point it must be repaid in full, typically through sale of the property, remortgaging, or using other savings or investments. This is the most common structure for UK landlords because it keeps monthly costs significantly lower, maximising monthly cash flow and rental yield, and it also makes it easier to pass the lender’s rental income stress test since the stressed payment is calculated on interest alone.
A repayment (capital and interest) buy-to-let mortgage works like a standard residential mortgage: each monthly payment reduces both the interest owed and the outstanding capital, so the loan is fully repaid by the end of the term and you own the property outright with no balloon repayment to plan for. The trade-off is materially higher monthly payments, which reduces monthly rental profit and can make it harder for a property to pass affordability testing. Landlords focused on long-term income generation and portfolio growth tend to favour interest-only, using the improved cash flow to save deposits for further purchases or to fund renovations, while landlords who want a mortgage-free asset for retirement income or inheritance sometimes prefer repayment or a mixed approach. Whichever route you choose, lenders will want to see evidence of a credible repayment strategy for interest-only lending, particularly as you approach the end of the mortgage term.
How does stamp duty work when buying a rental property?
Buying a rental property in England or Northern Ireland means paying an additional 5% Stamp Duty Land Tax (SDLT) surcharge on top of standard rates, applied to the whole purchase price (above the £40,000 threshold) rather than just the amount above the standard nil-rate band. This surcharge, which rose from 3% to 5% in the Autumn 2024 Budget, applies whenever you’re purchasing an additional residential property, whether that’s your first buy-to-let or your tenth, and whether you’re buying in your personal name or through a limited company (companies pay the surcharge on any residential purchase, even their first).
For a £250,000 rental property purchase, for example, the surcharge alone adds a substantial sum to the transaction, on top of standard SDLT bands. Scotland and Wales operate their own equivalent taxes (Land and Buildings Transaction Tax and Land Transaction Tax respectively) with their own additional-property surcharges, so rates differ if you’re buying outside England. Because stamp duty is a significant upfront cost that directly affects your overall return on investment, it should always be factored into your total deposit and cash requirement calculation before you commit to a purchase, and a broker or solicitor can confirm the exact liability for your specific property and structure before you exchange contracts.
What is a portfolio landlord, and how does it affect my mortgage options?
Under Prudential Regulation Authority (PRA) rules, a “portfolio landlord” is anyone who owns four or more mortgaged buy-to-let properties, whether held in their personal name, jointly, or through a limited company. Once you reach this threshold, lenders are required to underwrite you differently: rather than assessing each new mortgage application in isolation, they must review your entire property portfolio, including the rental income, mortgage balances, and loan-to-value of every property you own, before agreeing to lend on a new one.
In practice, this means portfolio landlords need to provide considerably more documentation for each application, often including a full portfolio schedule, business plan, and cash flow projections, and not every lender is willing or able to lend to portfolio landlords at all, which narrows the available market. On the positive side, some specialist lenders focus specifically on experienced portfolio landlords and offer more flexible criteria, higher maximum lending limits across a portfolio, and dedicated relationship underwriting once you’ve demonstrated a track record. Reaching portfolio landlord status is often the point at which working with a specialist buy-to-let broker becomes less of a convenience and more of a necessity, since dealing with differing portfolio-wide affordability calculations across lenders without expert help can significantly limit your growth options.
How do I remortgage a rental property or release equity to grow my portfolio?
Remortgaging is one of the most common ways UK landlords fund the deposit for their next purchase without needing new savings. If your rental property has grown in value since you bought it, or if you’ve paid down some capital, you may have built up equity that a lender will allow you to release by remortgaging to a higher loan amount, subject to the same LTV limits (typically 75%–80%) and rental income stress tests that apply to a purchase.
Most landlords choose to remortgage when their current fixed-rate product is coming to an end, since this avoids paying the lender’s standard variable rate (SVR), which is usually considerably higher than fixed products, and it’s typically possible to secure a new deal up to six months before your current rate expires, giving you time to plan. Lenders will want to know the purpose of any released equity, and using it as a deposit for a further rental property purchase is a widely accepted and common reason. It’s worth noting that releasing equity increases your loan amount and therefore your monthly interest payment, which needs to still pass the rental income stress test on the property being remortgaged. Landlords who plan to recycle equity across a portfolio, as in our case study above, often benefit from reviewing their whole portfolio’s mortgage maturity dates together with a broker, so remortgages can be timed and structured to support ongoing purchases rather than happening reactively.
Need Personal Mortgage Advice?
Every buyer’s situation is different. While this guide explains the general rules, the right mortgage for you depends on your income, deposit, credit history and future plans. If you’d like tailored advice, I’m here to help, with whole-of-market coverage.
This guide is for general information only and does not constitute financial or tax advice. Buy-to-let mortgage and tax rules can change, and your individual circumstances will affect the options available to you. Speak to Harry at HTG Mortgages for advice on your situation.
If you are weighing up company ownership, read my guide to transferring a property into a limited company first, because the stamp duty and capital gains costs surprise most landlords.
