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.
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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. While most lenders prefer to lend to existing landlords and property owners, it is possible to get a buy-to-let mortgage as a first-time buyer. This 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.
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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:
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.
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.
Capital and repayment:
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.
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.
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.
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.
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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.
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 October 2023
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.
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.
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:
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.
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.
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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.
Speak to a Buy-to-let expert
Maximise your chance of mortgage approval with a specialist in buy-to-let mortgages
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.
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