Buy-to-Let Secured Loans

Find out everything you need to know about secured loans, whether you're eligible for one and how a mortgage broker can help you secure the best deal.

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!
Home Buy To Let Mortgages Buy-to-Let Secured Loans
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: March 15, 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.

March 15, 2024

As a landlord you may find yourself wanting to borrow extra money against one of your properties, perhaps to fund renovations or to raise a deposit for your next investment purchase.

In this article we’ll look at how you go about getting a secured loan on a buy-to-let (BTL), eligibility criteria and how a specialist mortgage broker can help you secure the best deals.

Can you get a secured loan on a buy-to-let property?

Yes, as long as you have enough equity in the property and can meet the lender’s affordability and eligibility criteria.

How would this work?

With a secured loan rather than an unsecured loan, the amount you borrow is secured against an asset – in this case your buy-to-let property – meaning your property is at risk should you find yourself unable to repay the loan.

A secured loan then is very much like a mortgage and is sometimes called a second mortgage or a second charge mortgage. The ‘second charge’ part of the name means that in the event of repossession, your original mortgage provider would be the first creditor to be repaid and the second charge mortgage provider would be paid second.

How much you can borrow will depend on several factors, including how much equity you have available in your property, your current rental income and projections, and your other financial commitments. Providing you have enough equity and can afford the repayments, you can get third or even fourth charge mortgages on a buy-to-let.

Maximise your chance of mortgage approval with a specialist in secured loans

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!

Eligibility criteria for second charge buy-to-let mortgages

To make sure that you’re eligible for a BTL second charge mortgage, your lender will consider several factors:

  • How much equity you have in your property – Your lender will want to know that their money is safe should the worst happen, so they will impose a cap on what proportion of the value of the property you can borrow – known as the loan to value ratio or LTV – to allow for any fluctuations in price. Most BTL lenders will set a maximum LTV of around 75%, sometimes 80% depending on your other circumstances. If you own a property worth £200,000 then, and have an existing mortgage of £100,000, you could be eligible to borrow an additional £50,000, using a secured loan, with a LTV of 75%.
  • Rental income – Although your personal income may come into play, for BTL secured loans it’s more important to be able to show regular rental income that is more than enough to cover both your existing mortgage and the repayments on the second mortgage.
  • Credit history – Having credit issues on your file such as defaults, IVAs or even things like the use of payday loans can impact your ability to get a BTL secured loan. If you think that your credit history is going to be a problem then speak to a bad credit buy-to-let broker.
  • Property type – While you shouldn’t find any difficulties with standard construction properties, some lenders may refuse BTL second mortgages for certain property types including HMOs. Make sure your broker understands the specifics of your property and they will be able to filter the lenders that match your needs.
  • Age – Some lenders set a minimum age of 21 for BTL second mortgages.

How a buy-to-let broker can help you get the best deal

Getting a buy-to-let secured loan isn’t as simple as comparing a few rates and picking the best. There are all sorts of factors to consider, like whether or not there are more affordable solutions, how much equity you can afford to spare and how your rental projections and credit history will impact your eligibility.

Your safest option is to work with a mortgage broker who specialises in BTL secured loans, who will be able to look at your unique circumstances and help you work out the best route for you.

Make a quick online enquiry now and find out how our free, no-obligation matching service could help you find exactly the right broker for you.

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

What rates to expect

Rates on a second charge mortgage tend to be slightly higher than on a first mortgage as your new lender is only second priority should you default on your loan and you’ll therefore be seen as slightly higher risk. Typical rates tend to be between 1%-2% above the Bank of England base rate.

The exact rates that you can expect will depend on a number of factors, including primarily how much you are looking to borrow relative to how much equity you have in your home.

The lower the LTV, the better rates you’re normally able to obtain as this will attract more lenders to your application. On the flip side, having a patchy credit history can also increase the rates you pay on a second charge mortgage as this will reduce the pool of lenders willing to consider you for further lending.

Alternatives to consider

Although a second charge mortgage can be a good way to raise that extra capital, there are alternatives which might suit you better depending on your circumstances.

Remortgaging to release equity

Rather than take out a second loan secured against your property, one option is to remortgage, release additional equity, and have one larger mortgage. While there are definitely benefits to BTL remortgaging, you may find that you aren’t able to match your current rates on a new mortgage or that you’re liable for early repayment charges, making it more expensive overall.

Remortgaging is the most viable alternative if you’re out of any fixed rate period and can match or better your current deal, otherwise you may be better keeping your original rate and taking a second charge mortgage separately. Your broker will be able to help you weigh up your options.

Unsecured loan

If you only need to borrow a small amount then an unsecured loan can be a better option and is much quicker to organise, with no need for extensive checks or a property valuation. You can find unsecured loans from any lender up to £25,000 or may be able to get up to £50,000 if it’s through your existing bank.

Rates on unsecured loans tend to be higher than a secured loan because you aren’t backing your borrowing with the security of an asset.

Bridging loan

A bridging loan could be an alternative to a second charge mortgage if you only need the capital for a short period, for example as the deposit for a new property purchase while you’re waiting on the sale of an existing property.

Bridging finance is quicker to arrange than a mortgage and more flexible, but it can be expensive, so make sure you work through the costs with your broker.

Get matched with a buy-to-let mortgage broker

Deciding whether or not a BTL second charge mortgage is the right option for you can feel confusing, with different options and rates to compare. Having the support of a broker who has specific experience in buy-to-let second charge mortgages can help to provide a clearer picture, plus they can act on your behalf to find and negotiate the best rates for your loan.

Give us a call on 0808 189 2301 or make an online enquiry and we’ll quickly assess your needs and match you with a broker who has just the right knowledge and expertise to help you get the BTL secured loan you need.

Maximise your chance of mortgage approval with a specialist in secured loans

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, just as for a primary mortgage, your lender will want to be sure of the value of the asset that they are securing the loan on, and so a valuation will be part of the application process.

A secured loan is a much more involved process than an unsecured loan, so it will take longer to get set up – sometimes up to around 3-6 weeks. This allows time for credit and affordability checks, a valuation and checks on things like your legal ownership of the property and any restrictions on the land.

Ask us a question

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