First-Time Buyer Buy-to-Let Mortgages

Buy-to-let mortgages for first-time buyers are increasingly common. Find out which lenders offer them and how to apply.

Which of the below best describes your situation?

Home Buy To Let Mortgages First-Time Buyer Buy-to-Let Mortgages
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: April 22, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

April 22, 2024

In this article, we’ll look at how to get a buy-to-let mortgage as a first-time buyer and how a specialist broker can take you step-by-step through the whole process.

Can you get a buy-to-let mortgage as a first-time buyer?

Yes, first-time buyers can purchase buy-to-let properties, but the process may involve stricter lending criteria and higher deposits compared to residential mortgages. Lenders will assess your ability to cover mortgage payments through rental income, alongside your creditworthiness and financial stability.

If you’re a first-time buyer, it can be a good way to get on the property ladder. Especially if you already live rent-free somewhere else, such as your parent’s home or accommodation provided by an employer.

Maximise your chance of mortgage approval with a specialist in buy-to-let mortgages

Get Started

Ask Us A Question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

Feefo 5 Stars
1 of 3
£
£
£
2 of 3
3 of 3 Send!

Available lenders and eligibility criteria

Around 30 lenders will consider applications from first-time buyers for buy-to-let mortgages. These include some of the major high street banks, such as NatWest and Barclays, as well as more specialised mortgage lenders.

However, the eligibility criteria can be very strict. For example, several lenders only offer buy-to-let mortgages to first-time buyers who live in accommodation that’s provided by their employer. Others require at least one applicant to be a property owner but will allow a first-time buyer as the second (or subsequent) applicant.

Here are some of the other main criteria:

Deposit

Buy-to-let mortgages require larger deposits than residential mortgages, especially if you’re a first-time buyer, so you’ll need at least 20% or 25% of the property value.

Rental income

For any buy-to-let mortgage, most lenders will require that the rental income of the property will cover between 125% and 145% of the monthly mortgage repayments. There’s a good chance your requirements will be at the higher end of the scale if you’ve never owned a property before.

Use our mortgage calculator to get a better idea of whether your mortgage is affordable based on the property’s rental potential.

Buy-to-Let Mortgage Calculator

Our buy-to-let mortgage calculator can show you how much your mortgage could cost you each month and overall. Simply enter the rental property value, deposit, anticipated monthly rent, interest rate, mortgage term and our calculator will do the rest.

Enter the value of the rental property here
£
A deposit of at least 20% is usually required for a buy-to-let mortgage
£
Most lenders will require a deposit of at least 20%
Deposit must be less than the property value
Enter the anticipated monthly rent here
£
Enter the mortgage rate, 5.5% is a typical rate currently but this can vary
%
Enter the mortgage term, 25 years is the average but lenders can offer shorter and longer terms
years
Borrowing

Loan to Value ratio (LTV):

Most lenders won't offer buy-to-let mortgages over a LTV of 80%.

Interest Cover Ratio (ICR):

Most lenders require rental income to be at least 125%-145% of the interest repayments for a buy-to-let mortgage.

Get started with a specialist buy-to-let broker to find out how much they could help you save on your monthly mortgage repayments.

Applicant income

With no experience as a landlord, lenders could be concerned about your ability to maintain consistent rental income without any void periods. So, they might assess your other income sources too. Not all have an additional minimum income requirement, but it could be between £25,000 and £40,000.

Applicant age

Residential mortgages usually have a minimum age of 18. Buy-to-let mortgages often have a higher minimum age of 21 or 25. This is no different for first-time landlords. There are a small number of lenders who will consider buy-to-let mortgages for 18-20-year-olds – Dudley Building Society and Penrith Building Society for example – but they are few and far between and will have strict eligibility criteria.

Credit history

Bad credit often isn’t a problem with buy-to-let mortgages (as the repayments are expected to be covered by the rental income, rather than the applicant). However, if you’re a first-time buyer, it might pose more of an issue as the overall risk to the lender could be higher.

We're so confident in our service, we guarantee it.

We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*

Happy approved couple

How a broker can help with your buy-to-let mortgage

Your best chance of finding the right mortgage is to work with a buy-to-let specialist. If you make an enquiry we can arrange for an advisor we work with to contact you straight away.

They can help you with:

Providing advice and guidance for a first-time buyer

Becoming a buy-to-let landlord is a big decision that comes with a lot of responsibilities, costs, and tax implications. A specialist broker can help you decide whether it’s the right option for you.

Understanding lender requirements

Of the 30 lenders who offer buy-to-let mortgages to first-time buyers at the time of writing, you may only qualify for a handful, depending on your personal circumstances. Your broker will identify the lenders you’ll have the best chance with.

Finding the best rate

The rates table below offers an illustration of the best rates currently available for buy-to-let mortgages.

Lender Product Details
Frosted Rates Image

Looking for more rates and deals?

We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.

Last updated May 2024

The rates quoted above were correct at the time of writing and are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time.

Calculating your rental yield

Your broker will be able to help you work out the potential rental yield for the buy-to-let property you’re looking to buy. You can also use our calculator below:

Rental Yield Calculator

This calculator will show you the rental yield on your buy-to-let property using either the original purchase price, plus associated costs, or the current value. All you need to do is choose which option you want to base your calculation on and your monthly rental premiums.

Input either the original property purchase price or current value to work out the rental yield.
£


£

Gross Rental Yield:

Net Rental Yield:

Now you've worked out what your current rental yield is, why not speak to a broker to see what buy-to-let mortgage/remortgage opportunities are available? With their expertise in this market they'll be able to identify a range of new deals which could reduce your mortgage payments and, as a result, improve your overall rental yield.

Getting approved

If your application is on the borderline of a lender’s eligibility criteria, your broker may be able to leverage their relationship with that lender to help you seal the deal. To speak to one of the buy-to-let brokers we work with, fill out an enquiry form.

First-time buyer schemes for buy-to-let

Currently, there are no first-time buyer schemes that include buy-to-let purchases. Government schemes for first-time buyers, such as Lifetime ISAs, Shared Ownership, and Help to Buy equity loans, can’t be combined with a buy-to-let mortgage.

If you’re looking for help to buy because you have a small deposit, consider applying to a lender with a low deposit requirement. While it’s usually expected that you’ll have at least a 20% deposit, a specialist buy-to-let mortgage broker might be able to introduce you to a lender with lower deposit requirements than this.

Can you get a buy-to-let mortgage with a guarantor?

This would be unusual and having a guarantor would not help your chances of mortgage approval, since buy-to-let mortgages are based on rental income, not your personal earnings.

If you have someone willing to act as a guarantor who already owns property, an alternative would be to list them as an applicant on a joint borrower, sole proprietor mortgage. This may make your application more attractive to lenders concerned about your lack of history as a property owner.

This is, of course, a different proposition to acting as a guarantor that you’ll need to discuss with the individual. In theory, since your mortgage repayments should be covered by rental income, they would not need to make any payments towards the mortgage. However, there may be tax implications.

How much stamp duty do first-time buyer landlords pay?

First-time buyers will pay no stamp duty as long as the property value is less than £425,000. This applies whether you will be living in the property or renting it out. For property worth between £425,001-£625,000, you will be liable for stamp duty at a rate of 5%. For properties valued above £625,000, the standard rates will apply.

To see how this could work out for you, based on the specific buy-to-let property you’re looking to buy, use our calculator below:

calculator icon

Stamp Duty Calculator

This calculator can tell you how much Stamp Duty Land Tax you will need to pay on your property purchase, whether you're a first-time buyer, a home-mover or in the market for an investment property.

Enter an amount in pound sterling
£

Your stamp duty to pay is:

Your effective tax rate is

Now that you've worked out how much stamp duty is payable, it's a good idea to talk to a broker about your mortgage options. Their knowledge and expertise can help you make sure you aren't paying over the odds with all costs and fees factored in.

Get matched with a buy-to-let mortgage specialist

Whether you’re ready to apply for a mortgage or you’re still in the early stages of considering becoming a first-time landlord, it’s worth seeking specialist advice to understand what options are financially viable for you.

We work with numerous brokers who specialise in buy-to-let mortgages and can give you the answers you need. If you’d like, we can match you with one for a free, no-obligation chat. To get started, just enquire online or call 0808 189 2301.

Maximise your chance of mortgage approval with a specialist in buy-to-let mortgages

Get Started

Ask Us A Question

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we'll get the best expert to help.

Feefo 5 Stars
1 of 3
£
£
£
2 of 3
3 of 3 Send!

FAQs

Yes, in certain circumstances, you can get a holiday let mortgage as a first-time buyer. However, you’ll only have around a dozen lenders to choose from, so you may need to meet strict lending criteria.

As a first-time property owner, you can typically take in one or two lodgers within the terms of your mortgage. You would need to be occupying the property at the same time.

If you want to move out and let the whole property, you consent from your lender to switch to a buy-to-let mortgage. If you’re able to exit your mortgage now, you could also apply to remortgage with a different lender. This might be tricky without experience as a landlord, but it’s not impossible.

Alternatively, if you want to let your current home and buy a new property to live in, you could consider a let-to-buy mortgage.

If you have a buy-to-let mortgage and you’d like to move into that property, you’ll need to remortgage with a residential mortgage. That won’t necessarily be a problem, but you will need to meet the lender’s requirements for this type of mortgage, which will be different from their buy-to-let criteria.

The income you get from renting out a property is taxable, so you’ll need to include it in your self-assessment tax returns. It will then be liable for tax as any other income – at 20%, 40% or 45% depending on your income tax banding. You may also be liable for capital gains tax if you sell the property for more than you paid for it, factoring in costs and your annual allowance.

Ask a quick question

We can help!

We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Buy to Let Mortgages

Ask us a question and we'll get the best expert to help.

Our Brokers

Get in touch today

Make an enquiry and we'll arrange for an experienced mortgage broker we work with to contact you straight away.

1 of 3
£
£
£
2 of 3
3 of 3 Send!

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

Maximise your chances of approval, whatever your situation - Find your perfect mortgage broker

By browsing our site you consent to our use of cookies.