Buy-to-let mortgages work differently from residential ones — different deposits, affordability tests and tax treatment. Here’s how BTL lending works, the personal-vs-company choice, and what to watch at remortgage time.
Many landlords borrow through a limited company (SPV) for the full mortgage-interest relief that Section 24 denies individuals. Company BTL rates are often a little higher and lenders are more specialist — weigh the tax saving against the cost and admin (see our CT600 and SA105 guides).
Lenders apply an interest coverage ratio — your rent must exceed the mortgage interest by a set margin at a stressed interest rate. Higher-rate taxpayers borrowing personally often face tougher tests, which is another reason company structures are popular.
Track when your fixed rate ends — rolling onto the lender’s standard variable rate can sharply raise your costs. Plan your remortgage a few months ahead so you’re not caught out.
Typically around 25% of the property value or more, though it varies by lender and product.
Often, yes — many landlords choose interest-only for cash flow, repaying the capital on sale or refinance.
It can give full mortgage-interest relief (unlike Section 24 for individuals), but rates and admin differ. It’s a tax-and-cost trade-off — take advice.
An interest coverage ratio lenders use: your rent must cover the mortgage interest by a set margin at a stressed rate.
You usually roll onto a higher standard variable rate, so plan a remortgage ahead of the end date.
This guide is general information, not professional tax or legal advice. Rules, rates and thresholds change — check GOV.UK and take advice for your own situation.
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