Buy-to-Let Mortgage Rates

How to find the best mortgage interest rate for your buy-to-let investment property

Home Mortgage Interest Rates Buy-to-Let Mortgage Rates
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Updated: March 15, 2024

Whilst property is still considered a good investment, it’s become harder to guarantee a healthy profit margin. Securing the lowest possible buy-to-let mortgage rate will certainly help to minimise your outgoings and thereby improve your return on investment.

We’ve looked at the best available rates now to help you forecast your property’s profitability. The table below provides an illustration of the best interest 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 December 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.

Typical interest rates for buy-to-let mortgages

The rates table above offers a good indication of what interest rate to expect for a buy-to-let mortgage in the current market conditions. The rate you could secure will depend on factors including the property value, the size of your deposit or loan-to-value (LTV), and the type of buy-to-let mortgage you want (personal or as a business).

It also depends on the type of rates package you’d prefer – fixed or variable rate. With a variable-rate mortgage, as the name suggests, your rate can go up and down, usually if the Bank of England base rate changes.

The alternative is a fixed-rate mortgage where your rate stays the same for an agreed period (e.g. five years). The rates can start a little higher, to protect the lender in case the Bank of England base rate spikes.

Why are buy-to-let mortgages more expensive?

Buy-to-let mortgages typically have higher interest rates than conventional residential mortgages as they’re generally perceived to represent a slightly higher risk for the lender. This is because of differences in eligibility criteria which centres on the rental income, rather than employment income. And rental income is deemed, potentially, to be more volatile.

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How to compare rates and deals

You can’t compare mortgage deals by looking solely at the advertised rate. The best – smartest – way to thoroughly assess all of the best interest rates is to seek the help of a buy-to-let mortgage broker.

They’ll be able to help you with:

  • Identifying the right lenders who are offering the best interest rate deals currently available for buy-to-let mortgages
  • Deciding what type of rate would best suit your circumstances
  • Looking more closely at each deal, what fees are attached and whether you can pay this upfront or add it to your mortgage
  • Preparing your application with all the necessary information and documentary evidence, giving you the best chance of success – first time!

If you get in touch we can arrange for a buy-to-let broker we work with to contact you and discuss your requirements in more detail.

How loan-to-value affects your rate

As with any mortgage, having a larger deposit will usually help you to get a lower mortgage rate. Lenders usually require a larger deposit for a buy-to-let mortgage than for a residential mortgage. So, you’ll find plenty of deals if you have a 40-50% deposit, fewer if you have 20-30%, and none, currently, with only a 10% deposit.

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How much your mortgage will cost

If you’d like to find out how much your monthly mortgage repayments will be at a specific interest rate, enter the property details into the calculator below. You can increase or decrease the rate to show how that will impact the cost.

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
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A deposit of at least 20% is usually required for a buy-to-let mortgage
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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.

Repayment vs interest-only

Most mainstream lenders – including those featured in the rates table above – will quote the same interest rate regardless of whether you opt for interest-only or capital and interest as a repayment method for your buy-to-let mortgage.

Of the two choices, interest-only tends to be the more popular choice for buy-to-let investors as the payments will be lower – because they only include the interest element – and the property itself is usually used as the repayment vehicle to repay the original capital owed at the end of the term.

Rates for HMO properties

Only around half of buy-to-let mortgage providers will lend against houses in multiple occupation (HMOs). Take a look at our table below for a snapshot of the deals currently available, but please note that these are subject to change.

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 December 2023

Please note that the above rates were accurate at the time of writing, but are always subject to change at the lender’s discretion. Speaking to a mortgage broker is the best way to find the most up-to-date deals.

Why use Online Mortgage Advisor?

Now you know some of the best available buy-to-let mortgage rates at the time of writing but, unfortunately, we can’t tell you which of these you would qualify for. Each lender has their own eligibility criteria, including whether they’ll lend to first-time landlords, what property types they’ll lend against, and whether that includes HMOs.

So, to find the best rate for someone in your circumstances, it’s best to discuss your specific situation with a mortgage broker who specialises in buy-to-let. You can find one using our free, unique broker-matching service. Just call 0808 189 2301 or contact us online.

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FAQs

Yes, a little. You’ll need a special purpose vehicle (SPV) mortgage, and these have slightly higher rates, as well as slightly higher fees to reflect the added complexity and paperwork.

When you let to buy, you’ll be taking on two mortgages simultaneously: one for the property you are letting, and a second for the property you’re buying to live in. These two mortgage interest rates are calculated separately.

Find out more in our guide to let-to-buy.

Not always. Rates and fees are two aspects of a mortgage that you’ll need to compare between lenders, and you shouldn’t look at either in isolation.

A broker can help you compare the total cost of different mortgages, including rates and fees.

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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!

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Pete Mugleston

Mortgage Advisor, MD

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