Quick Links:
The main downsides of a buy to let mortgage are the cost of getting in, the tax treatment once you own the property, and the fact that the house has to pay for itself every month whether or not a tenant is living in it. Most lenders want a 25% deposit, the stamp duty surcharge on additional properties adds thousands of pounds to the purchase, and mortgage interest is no longer fully deductible against rental income for landlords who buy in their own name. On top of that, the rent has to cover the mortgage payment by a margin the lender sets, so the loan size depends on the rent rather than your salary.
None of that makes buy to let a bad idea. It means the sums need doing properly before you commit, because the costs are front loaded and the returns arrive slowly.
Why is a buy to let mortgage more expensive than a residential one?
Lenders treat a rented property as a business loan secured on a house. The deposit is bigger, product fees are often higher and are frequently charged as a percentage of the loan rather than a flat sum, and the rate on a buy to let product sits above the equivalent residential product because the lender is relying on rental income rather than your own earnings. Most buy to let mortgages are interest only, which keeps the monthly cost down but means the full loan is still owed at the end of the term.
Does the property have to earn its keep?
Yes. Every lender runs a rental cover test, and if the rent is too low for the loan you want, the loan is cut regardless of how much you earn. The wider picture is on my buy to let mortgage hub. If you are wondering whether you would qualify at all, I have answered is it hard to get a buy to let mortgage separately. The rest of this post goes through each downside in turn.
Most lenders want a 25% deposit on a buy to let, with a few going to 80% or 85% loan to value
Mortgage interest relief for individual landlords is restricted to a basic rate tax credit rather than a full deduction
The rent must cover the mortgage payment by a set margin, so the rent decides the loan size, not your salary
What do the downsides of a buy to let mortgage add up to in pounds?
Take a £250,000 flat bought as a second property in England. A 25% deposit is £62,500, leaving a mortgage of £187,500. Stamp duty on an additional property includes a 5% surcharge on top of the standard bands, which on a £250,000 purchase comes to roughly £15,000 in England (Scotland and Wales have their own property taxes). Add legal fees, a lender product fee that could be 1% or 2% of the loan, a valuation and any works to bring the property up to letting standard, and the cash needed before the first tenant moves in is somewhere around £85,000.
That is the first downside: the entry cost is high and most of it does not come back until you sell.
The second is the running cost. Most buy to let mortgages are interest only, so the monthly payment is lower than a repayment loan on the same sum, but you are not reducing the debt. At the end of the term the £187,500 is still owed and has to be repaid from a sale, a remortgage or savings. In the meantime you carry letting agent fees, gas and electrical safety checks, an EPC, landlord insurance, repairs and any months where the flat is empty between tenants. The mortgage still falls due in an empty month.
The third is tax. Since April 2020 a landlord who owns in their own name cannot deduct mortgage interest from rental income. Instead they receive a tax credit worth 20% of the interest paid. A higher rate taxpayer is taxed on rent they never see because the interest that ate it is no longer an allowable expense. Companies are taxed differently, and I cover that further down.
The fourth is the exit. Capital gains tax applies when a rental property is sold, and the rules on what counts as a second property for stamp duty on buy to let also catch people who intend to move house later while keeping the rental.
Is it difficult to get a buy to let mortgage?
It is a different test rather than a harder one. A residential lender looks at your income and outgoings. A buy to let lender looks first at the rent. The lender takes the expected monthly rent, checks it against the mortgage payment calculated at a notional rate it sets, and requires the rent to exceed that payment by a margin, usually between 125% and 145% depending on your tax band. If the rent does not clear the bar, the lender reduces the loan until it does.
After that come the usual checks. Most lenders want at least 25% deposit, though across my panel one lender goes to 85% loan to value and a few to 80%. Some lenders set a minimum personal income, often £25,000, while others have none. Your credit history is reviewed, the property type matters (flats above shops, ex local authority blocks and non standard construction all narrow the field), and your age at the end of the term is checked. First time landlords have fewer lenders to choose from than experienced ones, and a first time buyer who wants a buy to let as their first property has fewer still.
Timescales vary, but most of the offers I have placed in 2026 have come through in under two weeks once the application is in. Where an application is unusual, a buy to let mortgage broker earns their fee by knowing which lender will take it before the application is made.
What I see in practice
The two things I look at hardest before a buy to let goes ahead are the rental income and the reserve behind the deposit. Where the rent only just covers the insurance, the letting agent and the mortgage, a void month or a boiler can turn the year negative, and where raising the 25% deposit leaves nothing in reserve, the first repair bill lands on a credit card. I am not there to tell anyone whether to buy; my job is to put those numbers in front of you plainly so the decision is yours. Every situation is different, and a purchase that does not work for one landlord can be perfectly sound for another with a bigger reserve or a stronger rent.
What happens to buy to let in 2026?
The direction of travel for landlords over the last few years has been tighter regulation, more paperwork and less generous tax treatment, and nothing in 2026 has reversed that. Energy efficiency standards for rented homes, the reform of tenancy law and the end of full interest relief all add cost or reduce flexibility. I do not make predictions about rates or prices. What I can say is that lenders are still lending, the rental cover test has not gone away, and the deposit requirement has barely moved.
Speak to an expert
If you are weighing up a buy to let, send me the asking price, the rent the agent expects and your deposit, and I will show you the loan the rental figures support and the lenders who would consider it.
Is buy to let a good idea?
I cannot answer that for a reader I have not met, and any article that tells you it is or is not a good idea is guessing. What I can do is set out what to check before you decide.
Start with the yield. Divide the annual rent by the purchase price. A gross yield that only just covers the mortgage interest and costs leaves no room for a void month or a new boiler. Then run the tax. If you pay higher rate income tax, the 20% credit on mortgage interest changes the sums considerably, and the tax implications for buy to let properties are worth reading before you speak to an accountant.
Consider whether a limited company structure suits your plans. A company pays corporation tax on rental profit after deducting all of its mortgage interest, but the mortgage products are fewer, the lender will want a personal guarantee, and getting money out of the company is taxed again. It tends to suit people building a portfolio more than someone buying one flat.
Look at the alternatives too. Some clients who ask about buy to let are really asking how to keep their current home when they move in with a partner, which is a let to buy question with a different set of lenders. Others would be better served by a holiday let, an HMO, or by not buying at all and overpaying the mortgage on their own home.
The right answer depends on your tax position, your other income, how long you plan to hold the property and what you would do if the tenant stopped paying. Your home may be repossessed if you do not keep up repayments on your mortgage.
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 can help, with 120+ lenders to choose from.
