A buy-to-let mortgage is used to buy or refinance a property you intend to rent out. It looks like a residential mortgage from the outside, but it is priced, structured and assessed differently, and the differences are where the money is.
This guide covers how the product works: fixed against tracker, interest-only against repayment, how long a term can run, what the fees actually cost you, and why the lowest advertised rate is frequently not the cheapest deal on the table.
How does a buy-to-let mortgage work?
The core difference is what the lender is underwriting. A residential lender is mainly assessing you. A buy-to-let lender is mainly assessing the property, and specifically whether the rent will cover the mortgage interest with a margin to spare.
That is why two people with very different incomes can be offered the same loan on the same property, and why a strong personal financial position does not on its own unlock a larger buy-to-let mortgage.
It is a substantial market. UK Finance recorded 58,272 new buy-to-let loans worth £10.8bn in the first quarter of 2026, up 3.3% by number and 7% by value on the same quarter a year earlier.
The composition of that lending tells you more than the headline. Remortgaging accounted for 39,160 of those loans, up 11.1% year on year, while purchases fell 14.9% to 16,871. Most buy-to-let activity right now is landlords refinancing what they already own rather than buying more — which makes getting the product structure right on a refinance a bigger decision than it used to be.
How much can you borrow?
Two things set the ceiling, and the lower of them wins.
The first is loan to value. Most of the market caps buy-to-let at 75%, so a 25% deposit is the usual starting point.
The second is rental cover, tested through an interest coverage ratio. The lender compares the expected rent against the mortgage interest at a stressed rate, not the rate you will actually pay.
The rule: PRA supervisory statement SS13/16. The Prudential Regulation Authority sets the minimum underwriting standards for buy-to-let. It records 125% as the industry standard minimum ICR and allows lenders to assume all borrowers are higher-rate taxpayers, which is why 145% is common in practice. On the stress test, lenders must allow for a rate rise of at least 2 percentage points and must assume a minimum borrower interest rate of 5.5%, unless the rate is fixed or capped for five years or more.
We have covered how LTV and deposits work in detail separately, including worked examples of the rent each LTV band requires. Our buy-to-let calculator will give you an indication for a specific property.
Fixed, tracker or variable?
A fixed rate holds your interest rate for an agreed period. A tracker follows an external benchmark, usually Bank Rate, and moves with it. Other variable rates move at the lender’s discretion.
Landlords have voted decisively on this. At the end of the first quarter of 2026 there were 1.47 million fixed-rate buy-to-let mortgages outstanding, up 1.4% year on year, against 453,000 on variable rates, down 9.5%. That is roughly three-quarters of the market fixed, and the gap is still widening.
There is a structural reason to look hard at the five-year fix in particular. Because a rate fixed for five years or more falls outside the interest rate stress test described above, the lender can assess the rent against a lower rate. On some properties that is the difference between the loan you wanted and the loan you were offered.
“Around three-quarters of landlords are now on fixed rates, and I do not read that as a prediction about where interest rates are heading. It is a decision about how much volatility a rental business can absorb. The rent arrives monthly and does not move. If the mortgage payment moves, that swing comes straight out of the margin. What people find surprising is that a five-year fix is also assessed differently by the lender, so on some properties the decision about certainty and the decision about how much you can borrow turn out to be the same decision.”
Hiten Ganatra, Managing Director, Visionary Finance
Interest-only or repayment?
Most buy-to-let mortgages are arranged on interest-only. The monthly payment covers the interest and nothing else, so the balance you borrowed is still outstanding at the end of the term and has to be repaid some other way — usually by refinancing, or by selling the property.
The appeal is cash flow. A lower monthly payment leaves more rental income in the business, which matters if you are funding maintenance, voids and tax from the same pot.
A repayment mortgage clears the balance over the term. It costs more each month and leaves less headroom, but you end up owning the property outright and building equity faster.
Neither is the right answer in the abstract. The question is what you intend to do with the property, and whether your exit at the end of the term is refinance, sale or ownership. A lender will ask you that, so it is worth having an answer.
How long can a buy-to-let mortgage term be?
Terms commonly run from around five years up to 30 or 35, with maximum age at the end of the term usually the binding constraint rather than any rule about the property.
On a repayment mortgage, a longer term lowers the monthly payment and helps increase the rental surplus, at the cost of more interest overall. On interest-only the monthly payment does not change with the term, so the term is really a question about when the capital has to be dealt with.
Do not confuse the mortgage term with the deal period. A 25-year mortgage with a two-year fixed rate is a 25-year commitment with a decision to make in two years’ time.
What fees should you expect?
The rate is one component of the cost. On buy-to-let, fees are often the larger one.
- Arrangement or product fee. Either a flat amount or a percentage of the loan, commonly in the region of 1% to 5%. Percentage fees scale with the loan, so on larger borrowing they become substantial. They can usually be added to the mortgage, but adding them means paying interest on them for the whole term.
- Valuation fee. Sometimes free on a particular product, sometimes not, and higher for larger or unusual properties.
- Legal fees. Payable on a purchase, and on a remortgage unless the product includes free legals.
- Broker fee, where one applies. Ours are set out at the foot of every page of this site.
A product fee charged at 2% on a £300,000 loan is £6,000. On a two-year deal, that is £3,000 a year before you have made a single interest payment.
Should you choose the lowest interest rate?
Usually not, and you can work out why with arithmetic rather than instinct.
On a £200,000 loan, one tenth of a percentage point on the rate costs £200 a year. A 3% arrangement fee costs £6,000 once. So the question is simply whether the rate saving over the deal period beats the extra fee.
The table below shows how much cheaper a 3% fee product has to be, in percentage points, to beat an equivalent product with a £999 fee. It assumes the fee is paid up front and compares like for like.
| Loan size | Two-year deal | Five-year deal |
|---|---|---|
| £150,000 | 1.17 points cheaper | 0.47 points cheaper |
| £200,000 | 1.25 points cheaper | 0.50 points cheaper |
| £350,000 | 1.36 points cheaper | 0.54 points cheaper |
| £500,000 | 1.40 points cheaper | 0.56 points cheaper |
Two things fall out of that. On a two-year deal, a gap of more than a full percentage point between products with those fee structures is rare, so the high-fee product usually loses. On a five-year deal the fee is spread over five years rather than two, and the calculation flips much more easily.
This is arithmetic, not advice, and real products differ in ways a table cannot capture. But it explains why sorting a best-buy list by rate is the wrong first move on buy-to-let.
“The most expensive habit I see is landlords sorting products by interest rate. On a two-year deal a percentage-based arrangement fee can swallow the entire saving before you have made a single payment. We cost every case over the full deal period (total overall cost) rather than by rate, and on smaller loans in particular the cheapest option is very often not the one with the lowest rate on it. It is not a complicated calculation. It is just one almost nobody does before they have already decided.”
Hiten Ganatra, Managing Director, Visionary Finance
What are early repayment charges?
An early repayment charge, or ERC, applies if you repay or refinance during the deal period. It is usually a percentage of the balance repaid, and on buy-to-let it often steps down each year of the deal.
ERCs matter more to landlords than to homeowners, because the reasons to exit early are more common. Selling the property, restructuring into a limited company, or refinancing to release equity for the next purchase can all trigger one.
Most products allow overpayments up to a set percentage of the balance each year without charge. If you expect to sell or restructure within the next few years, the ERC profile deserves as much attention as the rate.
How long do mortgage products stay on the market?
Not long, and the answer moves. Moneyfacts put the average shelf life of a mortgage product at 21 days in January 2026, 14 days in February and a record low of eight days in March. Those are whole-market figures rather than buy-to-let specifically, but the direction applies across the board.
The practical consequence is that a product you found last week may not exist this week. That is an argument for having your documents ready and a decision framework in place before you start looking, rather than for rushing a decision you have not finished making.
Are buy-to-let mortgages regulated?
Most buy-to-let lending is not regulated by the Financial Conduct Authority in the way a residential mortgage is, because it is a business transaction rather than a consumer one.
There are two significant exceptions.
- Consumer buy-to-let. Where you did not enter into the arrangement wholly or predominantly for business purposes — an inherited property, or a former home you now let out — it is regulated under the Mortgage Credit Directive Order 2015.
- Letting to a family member. Lending on a property let to the borrower or a related person is regulated under the FCA’s mortgage conduct rules, MCOB.
Which category you fall into changes which lenders can help and how the application has to be handled, so it is worth establishing at the outset rather than at the point of submission.
What changes for portfolio landlords?
The PRA expects lenders to treat anyone with four or more distinct mortgaged buy-to-let properties as a portfolio landlord, underwritten through a specialist process. Expect the lender to assess the whole portfolio: total borrowing, aggregate loan to value, cash flows, your assets and liabilities, and your business plan.
Criteria vary widely at that end of the market, and so do the products. If you already own several mortgaged properties, the practical constraint is usually which lenders will look at your portfolio shape at all. We work with portfolio landlords and with landlords based overseas, where criteria differ again.
Speak to an award-winning buy-to-let mortgage adviser
Visionary Finance was voted Best Buy-to-Let Broker at the what MORTGAGE Awards 2026 — an award decided by customer votes rather than by an industry panel, which is the kind we are most pleased to win.
Whether you are buying a first investment property or you remortgage one you already own, the useful comparison is total cost over the period you expect to hold the product, set against the lender’s rental calculation. That is a different exercise from scanning a best-buy table, and it is the one that decides what the mortgage actually costs you.
Speak to Visionary Finance about your buy-to-let mortgage on +44 (0) 1908 465 100.
Common Questions
How does a buy-to-let mortgage differ from a residential mortgage?
A residential lender assesses your income. A buy-to-let lender mainly assesses the property’s rental income against the mortgage interest at a stressed rate. Buy-to-let is also usually interest-only, usually capped at 75% loan to value, and in most cases not regulated by the FCA.
Are buy-to-let mortgages interest-only?
Most are, though repayment is available. Interest-only keeps the monthly payment lower and the balance unchanged, so the capital must be repaid at the end of the term, normally by refinancing or selling.
Is the lowest buy-to-let rate always the cheapest?
No. Arrangement fees are often charged as a percentage of the loan, and on a two-year deal a 3% fee typically needs the rate to be more than a full percentage point cheaper to be worth it. Compare total cost over the deal period.
What is an early repayment charge on a buy-to-let mortgage?
A charge for repaying or refinancing during the deal period, usually a percentage of the balance repaid, often stepping down each year. It is worth checking carefully if you may sell or restructure before the deal ends.
Do I need a bigger deposit for a buy-to-let mortgage?
Usually yes. Most buy-to-let products cap at 75% loan to value, so 25% is the normal minimum, against much lower deposits available on residential lending. A smaller number of lenders go to 80%, and a few specialists to 85%.
This article is general information about how buy-to-let lending works and is not advice. It is not tax advice. Lending criteria, interest rates, tax rules and regulatory expectations change; the position described is correct at the date of publication.
Worked examples illustrate the calculation only. They are not quotations and do not represent products available to you.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Visionary Finance Ltd is authorised and regulated by the Financial Conduct Authority. The FCA does not regulate certain types of mortgage, including some buy-to-let, international, bridging and commercial mortgages.
