Regulated Family Buy-To-Let Mortgages

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Home Buy To Let Mortgages Regulated Family Buy-To-Let Mortgages
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: December 11, 2023

How we reviewed this article:

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

December 11, 2023

Being able to trust that your property is in good hands while helping someone you care about is why renting to family members is quite common. But there can be implications when it comes to financing. For this type of home loan you’d need a regulated buy-to-let mortgage.

So, how does a regulated mortgage differ from a standard buy-to-let? The guide below provides this information for you and offers all the guidance you’ll need to get your application approved.

Can you rent to a family member under a buy-to-let mortgage?

Yes, but the family member would have to occupy less than 40% of the property if you want to use a standard buy-to-let mortgage; perhaps they just rent a room while other tenants live in the rest of the property, for example.

If they’ll occupy more than 40% – which would be the more typical scenario – you’d need to apply for a regulated mortgage, also known in these circumstances as a family buy-to-let mortgage.

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What is a regulated buy-to-let mortgage?

This is a specialist mortgage that allows a borrower to rent out the entirety of their property, or above 40%, to a relative. You, as the borrower, could also live in the property alongside other tenants.

The loan is regulated by the Financial Conduct Authority (FCA), just like a residential mortgage, but the number of lenders offering this type of loan is lower and the requirements tend to be stricter.

That’s because lenders are aware of the possibility that families may not charge one another as much in rent and could be more inclined to let missed payments slide. This could potentially lead to trouble with the mortgage repayments, which is why lenders tend to view them as a risker loan.

The differences between a regulated and unregulated buy-to-let mortgage

In short, when you apply for an unregulated buy-to-let mortgage you’re not planning to live in the property yourself or to rent it out to family whereas a regulated buy-to-let mortgage would allow for that to happen. The below table lists the other key differences.

Unregulated buy-to-let Regulated buy-to-let
Not regulated by the FCA Regulated by the FCA
Approximate 25% deposit requirement Will likely require a bigger deposit
Loan amount based more on perceived rental income Loan amount based more on personal income
A relative cannot occupy more than 40% of the property A relative can rent the whole property
The borrower cannot live in the property A borrower can live in the property as long as there is also a paying tenant

Potential scenarios for a family buy-to-let mortgage

It might make sense to get a buy-to-let mortgage for family if:

  • You’re a parent who wants to buy a property for their child to rent out.
  • You want to have your parents or grandparents move into a property you’re purchasing.
  • You want to live in the house yourself alongside a tenant.
  • Your sibling will rent out your property with a partner or friend.

Eligible family members

In order to apply for this type of mortgage, you have to already have the family member in mind and they should have agreed to this arrangement.

They also have to be a close family member, such as a:

  • Child
  • Sibling
  • Parent
  • Grandparent

Cousins, second cousins, aunts and uncles won’t meet the criteria for this loan type.

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

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.

How a buy-to-let broker can help

Working out whether getting a buy-to-let mortgage with family tenants in mind is right for you and then applying for one comes with a whole host of complexities. An expert can help you navigate all of that.

The family buy-to-let mortgage brokers we work with:

  • Understand the nuances of regulated and unregulated buy-to-let mortgages and can ensure you’re applying for the right one to suit your circumstances.
  • Are familiar and have relationships with lenders that offer family buy-to-let mortgages, which means they know which lenders are more likely to approve your application.
  • Can help in compiling a regulated buy-to-let mortgage application while also addressing any potential factors that a lender could perceive as risky.

If you get in touch we’ll arrange for a buy-to-let broker with experience of regulated mortgages to contact you straight away.

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

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Eligibility criteria

As with all other regulated mortgages, a lender will be conducting a standard affordability assessment, rather than looking at the anticipated rental income the property will receive, which would be the key factor for traditional buy-to-let mortgages.

In addition, for this specific type of buy-to-let, certain lenders could have some other requirements. For example:

  • Be an individual applicant rather than a joint applicant.
  • Maximum loan-to-value (LTV) of 75%
  • Applicants must be older than 25 but younger than 75
  • Earnings (other than from rent) above £25,000 per annum to ensure you can afford the mortgage, during periods where the property is vacant

How much you can borrow

The amount you can borrow via a regulated buy-to-let mortgage will depend on your personal financial circumstances – your gross annual income, your outgoings, and potentially your age should you be an older borrower – and whether you meet the lender’s criteria. Differing to a standard buy-to-let, the main factor for consideration is your income rather than the projected rent the property will bring in.

As a guide, you can multiply your income by 4.5 or 5 to get an estimate. Take a look at our mortgage affordability calculator below to see how this may work out for you, based on your own annual income.

Mortgage Affordability Calculator

Use this calculator to determine how much you could potentially borrow for a mortgage, based on the typical salary multiples used by most UK lenders.

Input full salaries for all applicants

Your Results:

You could borrow up to 

Most lenders would consider letting you borrow

This is based on 4.5 times your household income, the standard calculation used by the majority of mortgage providers. To borrow more than this, you will need to use a mortgage broker to access specialist lenders.

Some lenders would consider letting you borrow

This is based on 5 times your household income, a salary multiple you might struggle to qualify for without the help of a broker. This income multiple is not widely available to customers who are applying directly with a lender.

A minority of lenders would consider letting you borrow

This is based on 6 times your household income, a salary multiple you will struggle to get without a broker. Six-times salary mortgages are usually only available under very specific circumstances.

Get Started with an expert broker to find out exactly how much you could borrow.

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For a more concrete figure, consult a broker. They’ll be able to factor in all the elements of your specific situation to share what loan amount is more likely.

Kevin's Story

Our broker got in touch really quickly

Our broker got in touch really quickly. They understood the situation and what we needed to get both mortgages over the line, and kept me up to date with the options available. They quickly set up a deal with another lender for the buy to let and that went through easily, meaning we didn’t lose any time or sleep in the process!

Read the full story
Kevin Williams

Family buy-to-let mortgage providers

As a slightly more niche product, the pool of lenders offering family buy-to-let mortgages is a little smaller. Many of the high street banks – Metro Bank, NatWest, Bank of Ireland, HSBC, Santander and TSB – for example, don’t offer regulated buy-to-let mortgages.

Some of the lenders that have been known to consider such applications include:

  • Virgin Money
  • Together
  • Saffron for Intermediaries
  • Bluestone Mortgages
  • Vernon Building Society

Often lenders won’t engage with an individual directly but prefer to work via an intermediary. This is where a broker can help. Having such a specialist in your corner will also help in sifting through the market to find the best rates and terms currently being offered by lenders.

Which lenders have you already tried?

Select the tiles below to find out how we can help you:


Typical rates for these mortgages

The table below provides an illustration of the interest rates available at the moment.

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.

What happens if you’re caught living in an unregulated buy-to-let?

If you or a family member opt to live in your property with an unregulated buy-to-let mortgage and take up more than 40% of the property, it wouldn’t be illegal but you’d be opening yourself up to potential problems.

For example, if it states in your lender agreement that only tenants can reside in the home then your mortgage provider would be within their rights to request the mortgage be repaid right away. If you didn’t have the assets to pay the mortgage off in full, you’d have to consider selling the property.

Switching from unregulated to regulated

If your circumstances do change and you or a family member want to live in the property rather than a tenant, talk to your lender to see whether they’d allow you to remortgage onto a regulated version.

It would also be worth talking to a family buy-to-let mortgage specialist who’d be able to share whether the rates and terms your current lender can offer are the best you’d find. If there is a better deal out there, you could remortgage with a different lender.

Speak to a broker experienced in family buy-to-let mortgages

With a mortgage so niche, expert advice is a must. The brokers in our database have specific family buy-to-let mortgage knowledge, which means they wouldn’t be advising you on how to get a generic mortgage but ensuring your application is built specifically with a family buy-to-let loan in mind and identify lenders who offer such mortgages.

Reach out today for your first and free consultation with a broker matched to your situation. Just call 0808 189 2301 or fill out our short enquiry form.

Maximise your chance of approval with a specialist in family buy to lets

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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.

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Having bad credit doesn’t mean an automatic no to an application but it will depend on the type of issue, the size of debt involved and the date it was registered. Putting down a larger deposit can offset the particular bad credit issue but this is something you should talk to a broker about.

It depends. Will they have more than 40% occupancy? If so, you’ll need to apply for a regulated buy-to-let mortgage.

Regardless of who you’re renting to, it’s best to have an agreement in place so that there can be no disputes and everyone is protected. Don’t forget to also purchase landlord insurance and put the rental deposit into a protection scheme.

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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

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