Buy to let

Your guide to buy to let mortgages


How do buy to let mortgages work?

Mortgages for rental properties are based on rental income, and lenders will typically look for this to be at least 125% of the monthly repayments on your mortgage.

This is called the Interest Coverage Ratio (ICR) and looks at whether your income will cover the mortgage payments, running and insurance costs of the property, as well as letting agent fees.

When considering a buy to let mortgage, you should make sure you understand the other costs such as valuation fees.

Landlord's checklist

Find out about the responsibilities that come with letting a property:

  1. 1

    Gas Safety and Energy Performance Certificate

    You must be able to provide your tenants with up to date certificates and have all gas appliances serviced regularly, usually once a year.


  2. 2

    Make sure you have insurance

    For any mortgage you must have buildings insurance. It can pay to shop around to find the right policy for you.

    You can also choose to take out landlord insurance, but it's not compulsory.


  3. 3

    Managing the property

    You could use an agency or manage the property yourself, but either way remember that tenants' deposits need to be held by a third party under the Tenancy Deposit Protection scheme.

    The scheme is compulsory, and can help resolve any issues between you and your tenants.


  4. 4

    Maintenance and redecoration

    Make sure you take into account any work you'll need to do before you rent the property out, from a lick of paint to updating the kitchen.

    Remember that you could get hit by unexpected costs such as a broken washing machine.


  5. 5

    Paying tax

    You'll have to pay Income Tax on your rental income, after deducting your day-to-day running expenses. 

    You'll also have to pay Capital Gains Tax on any profits over a certain threshold if you sell the property. You can get more information on gov.uk


  6. 6

    When your property is empty

    Your property could be empty in between tenants, so you'll need to make sure you can still pay your mortgage during this time.

Top questions when considering a buy to let mortgage

Get an Agreement in Principle

With an Agreement in Principle, you’ll find out how much you could borrow. This puts you in an ideal place to start your search for a buy to let property.

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