Buy-To-Let Mortgage Deposits

A mortgage broker can help you with how much deposit you'll need to invest in a buy-to-let property.

Firstly, where is your deposit likely to come from?

Home Deposits Buy-To-Let Mortgage Deposits
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 15, 2024

Buy-to-let mortgages typically require a larger deposit than conventional residential mortgages and that can be a barrier for many would-be property investors.

However, it’s possible to buy a rental property with a small deposit if you have the right approach. In this guide, we’ll tell you which lenders require the lowest deposits and how to improve your chances of mortgage approval.

We’ll cover the following topics…

 How much deposit do you need for a buy-to-let mortgage?

Buy-to-let mortgages differ in that lenders often demand higher fees and interest rates due to perceived higher risk. A minimum deposit of 20-40% of the property’s value is often required, with 25% being common. Lenders may require higher deposits, up to 40%, based on the borrower’s financial profile.

Lenders also typically reserve the highest Loan-to-Value (LTV) deals for previously owned houses. If you’re purchasing a flat, maisonette, or any newly built property, you’ll likely require a larger deposit. For example, few lenders will accept less than a 25% deposit for a new build flat.

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What’s the minimum deposit requirement?

A small number of lenders will consider applications with a deposit lower than 20%. Deposits of less than 10% are not out of the question but you would need to meet all of the other eligibility criteria in order to be successful.

Can you get a 100% LTV deal?

No, these types of mortgages always require a deposit. You’ll need to raise upfront capital if you want to invest in a rental property, and there are other costs to consider as well as your mortgage deposit, e.g. legal fees, letting agent fees, renovation costs and maintenance costs.

How to get a buy-to-let mortgage with a low deposit

It’s not easy to get a mortgage with less than a 20% deposit, but it’s possible if you follow these three steps.

Raise as much as you can

Refer to the list above of ways to raise a mortgage deposit and see if any of these methods will help you increase the amount you can contribute. The more capital you can raise, the more deals you’ll have access to.

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What type of deposit will lenders accept?

There are various ways to raise capital, and you’ll need to provide proof of the source.

Your buy-to-let mortgage deposit can come from:

How your deposit amount affects your mortgage rate

Unfortunately, you’ll usually pay a higher mortgage rate if you have a small deposit. That’s because there are fewer lenders to choose from and the ones that are available see your application as a high risk that they need to mitigate.

After the end of your fixed-rate period or discounted-rate period, you can consider remortgaging. If you’ve saved money from the rental income of the property, you can use that to remortgage at a lower LTV so that you’ll have access to more lenders.

Buy-to-let mortgage calculator

If you’d like to see how the deposit can affect your repayments, take a look at our calculator below:

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.

Which lenders require the lowest deposit?

If you’re buying a house, the BTL lenders who’ll accept the lowest deposits include Darlington, Foundation Home Loans, and Vida Home Loans. For flats, Kent Reliance and Kensington Mortgages are among your best options.

Remember that when you have very few lenders to choose from, you can’t afford to be declined. For the best chance of approval, you should work with a broker to prepare your mortgage application and carefully choose the lender best suited to your situation.

Get matched with a buy-to-let mortgage specialist

For applications like these, it’s really helpful if your buy-to-let broker has previous experience with investors who have low deposits. They’ll know what lenders look for and how to optimise your application.

If you’re not sure where to find someone with this expertise, we can help. Our broker matching service is designed to put you in touch with exactly the right person. Just give us a call on 0808 189 2301 or make an enquiry online.

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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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