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Buy to Let mortgages at different LTVs

A guide to buy to let mortgage loan to value ratios.

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By Pete Mugleston   Mortgage Advisor

Last updated: 10th May 2019 *

Every day, we receive a number of enquiries from prospective buy to let investors who are seeking a home loan for a property they intend to rent out.

Many of these customers want to know what the maximum loan to value (LTV) is for buy to let (BTL) mortgages, and how to get the best deals.

This article is going to explain UK lenders’ standard loan to value requirements for BTL properties, discuss the implications of very high and low LTVs, and how this can impact interest rates and choice of lenders.

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What buy to let mortgage loan to value ratio can I get?

Customers often ask us things like “What loan to value ratio (LTV) is typically required for buy to let mortgages?”

To put it succinctly, the majority of UK lenders offer BTL mortgage products at an average of 50-75% LTV, depending on the applicant and property type.

For example, a lower LTV is usually required if you have bad credit, if you’re a first-time buyer, if the property is a new build, or if your projected rental income does not satisfy lender requirements.

What is the maximum loan to value for buy to let mortgages?

The very highest buy to let mortgage loan to value ratio you can expect to be offered by a standard high street mortgage provider is unlikely to exceed 85% - best case scenario.

That being said, in exceptional circumstances it may be possible to borrow between 85%-95% LTV for your BTL - but these will be reserved for top applicants.

How do I get the best deal on a high LTV buy to let mortgage?

If you want the best deals available, think flawless credit history, conventional property type, a stable salary, and high projected rental income - to name a few.

Even if you tick all these boxes, you’ll have to work with a specialist high buy to let LTV mortgage lender. Make an enquiry and one of the experts we work with will be in touch.

What are the implications of low and high loan to value for buy to let mortgages?

So, how do lower and higher LTV percentages for your BTL property impact the terms of your mortgage? How do the interest rates compare, how many lenders are you likely to have access to? Read on to find out or make an enquiry to speak with a whole-of-market broker who can give you the right advice on BTL LTVs.

How do I get the best buy to let mortgages with 50-75% LTV?

Loan to value ratios of 50-75% are standard buy to let requirements of many high street banks and lenders.

Unless your specific circumstances mean you are deemed higher risk by lenders, you shouldn’t have too many problems securing a BTL mortgage with this LTV.

The BTL mortgage market is competitive, meaning you should have a wide range of lenders to choose from (depending on your circumstances). Although interest rates and fees are generally higher for BTL properties, you should still receive the best rates relative to the market if your deposit is between 25% and 50%.

That said, seeking whole-of-market advice from one of the brokers we work with will ensure that you end up with the optimum deal that you qualify for, whether you’re seeking the best buy to let mortgages with 60, 70% LTV or an even higher ratio.

How do I get the best buy to let mortgages with 80-85% LTV?

Again, you should start with whole-of-market advice to ensure that you end up with the best deal you qualify for and are paired with the right lender.

While they can be trickier to find, 80-85% LTV buy to let mortgages are still offered by some high street lenders.

Unless you’re a high risk applicant, you may be able to secure a loan without having to seek advice from a specialist.

There are far fewer mortgage providers offering high LTV BTLs, so your options will be more limited. It is recommended that you work with a broker for access to all the willing lenders on the market if you want the best rates.

Fees, and specifically interest rates are likely to be higher as there is far less competition, and the lenders that are willing to consider you will charge more to compensate the risk.

How do I get the best buy to let mortgages with 90-95% LTV?

For a buy to let mortgage with such low deposit requirements, whole-of-market advice is vital as the choice of lenders will be thin on the ground.

90-95% LTV BTL mortgages are not offered by high street banks or lenders. You will need to approach a high LTV BTL  broker who can put you in touch with specialist lenders offering this product.

If you are a high risk applicant, it is unlikely you will be accepted for a 90 or 95% LTV mortgage. Expect high interest rates, and additional fees - though that doesn’t mean a favourable deal is impossible.

Consider whether there are any ways you can boost your capital before proceeding. Can you remortgage an existing property or take out a joint BTL mortgage? Are you eligible for equity release?

What else impacts LTV requirements for BTL mortgages?

There are a number of other factors that have the ability to impact the minimum and maximum LTV buy to let mortgages on offer:

Credit history

Lending attitudes to bad credit vary considerably by provider, with some being very strict about accepting any applicant with an instance of adverse on their file, and others being relatively relaxed about recent, even severe cases.

When it comes to buy to let mortgages, your credit history could be the make or break between getting a low LTV BTL mortgage with premium rates, and attempting to scrape together a higher deposit and accept a less competitive rate.

This is why it’s so important to approach a whole-of-market broker who can scour the field and find you the most competitive deals for your specific situation. Make an enquiry before proceeding with any application.

Read more about bad credit mortgages here.

Affordability

Affordability criteria and assessments vary by lender.

For BTL applicants, some providers will base their decision purely on the projected rental income from the property.

Others will stipulate that a borrower must be earning “X” amount of personal income, as well as factoring in rental income - so as to reduce the risk of the borrower defaulting in the case of a rental shortfall.

Check out our article on buy to let mortgage affordability here.

The property type

The type of BTL you’re purchasing may also have a bearing on the loan to value ratio and the rates you end up on, as some lenders treat the following differently…

  • Student lets: Most lenders will ask for 25% deposit or above, although a handful of lenders offer 85% loan to value deals for student lets. The best rates tend to kick in if you can stump up around plus deposit.
  • HMOs: Most lenders cap the loan to value ratio at 65-75%, a few go up to 80% and a minority 85% as HMOs are considered higher risk.
  • Regulated BTLs: Most lenders offer these products with a loan to value ratio of 75%, meaning you will need at least 25% deposit.
  • Non-standard construction properties: Typically come with higher deposit requirements as some lenders consider them higher risk. You need a licence to run an HMO if there are 5 or more tenants, and the property has three or more storeys.

If you’re unsure about how the type of property you’re buying will impact the deals you qualify for make an enquiry and the BTL experts we work with will clear up any confusion and connect you to the right lender for your needs and circumstances.

Why speak to an expert if you’re seeking the best LTV for your BTL mortgage?

We’ve helped over 75,000 people find the right mortgage, even for buyers who have been declined a mortgage or have bad credit history.

In fact, our customers consistently rate us 5 stars on Feefo, mainly due to our high levels of service, but also because we offer offers a 5-star service with access to expert brokers who are:

  • Whole of market.
  • Can offer bespoke advice to customers buying BTL properties in the UK and overseas.
  • Have a working relationship with all buy to let lenders, including high street banks and specialist brokers.
  • Have successfully arranged high LTV BTL mortgages in the past.
  • Are OMA Accredited advisors.
  • Have completed a 12 module LIBF accredited training course.

Talk to a buy to let mortgage specialist

To get the best loan to value buy to let mortgage, call Online Mortgage Advisor today on 0800 304 7880 or make an enquiry.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances. We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

Updated: 10th May 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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