First-time buyer but-to-let mortgages

Find out everything you need to know about getting a buy-to-let mortgage as a first-time buyer.

Can a first-time buyer get a buy-to-let mortgage?

You can get a buy-to-let (BTL) mortgage as a first-time buyer; however, it can be a lot more difficult. Most buy-to-lenders want you to own a residential property already before they consider you for a mortgage.

This is because lenders like to see that you have experience making mortgage payments, so they see you as a greater risk if you’re a first-time buyer. Those that do offer buy-to-let mortgages to first-time buyers will usually:

  • Ask for a larger deposit

  • Charge you a higher interest rate

  • Ask for a higher projected rental income than the average

To help you find a buy-to-let mortgage, it’s worth talking to a mortgage broker. Our expert advisors can help you find lenders that could accept you as a first-time buyer.

How does a buy-to-let work?

Buy-to-let mortgages are used specifically for buying a property you will rent out to tenants. Here are a few things to be aware of when applying for a buy-to-let mortgage:

  • Larger deposit needed: Most buy-to-let lenders ask for a deposit of at least 25% of the property value. This is a lot higher than for standard mortgages, which can be as low as 5%.

  • Most BTL mortgages are interest-only: This means you only pay the interest charged on what you’ve borrowed. Most landlords choose this option as it maximises their rental profit, and the balance can be paid off by selling the property at the end of the term.

  • Affordability based on rental income: Your ability to afford the mortgage will largely depend on how much rent you’ll get from the property. The projected rental income will need to cover your mortgage payments plus at least an extra 25%, often more when you’re a first-time buyer.

  • Cover times of no rent: Make sure you can cover the mortgage if your property becomes unoccupied. Try to save some of the rental income to cover your payments if you have a period of time with no tenants paying rent.

If you decide to stop renting your property and live in it yourself, you will need the consent of your mortgage provider. You are not permitted to reside in the property as the landlord, so you may need to remortgage to a residential product.

Should I get a buy-to-let as a first-time buyer?

Getting a buy-to-let mortgage for first-time buyers could be a good option if you have money you want to invest in property but don’t want or need to move into your own home yet.

Alternatively, if you’re struggling to buy a property where you live, you could buy a BTL property somewhere else to help you onto the property ladder.

However, most first-time buyers will purchase a home for themselves before buying an investment property. Having your own property first will also make it much easier to get a BTL mortgage, and you can even get a better deal.

It’s also worth understanding that being a landlord comes with a lot of responsibilities and potential costs. You’ll need to be responsible for:

  • Advertising the property and finding tenants

  • Sorting landlord insurance

  • Putting deposit money into an appropriate protection scheme

  • Handling issues with the property, like leaks or maintenance

  • Collecting rent money each month

You can use a letting agent to manage your property for you, but you will need to pay them a percentage of the rental income to deal with these responsibilities.

How to get a buy-to-let mortgage as a first-time buyer

To get a BTL mortgage as a first-time buyer, you need to find a provider willing to lend to you. One of the best ways to do this is by speaking to a mortgage broker, who can search the market for you and identify the lenders most likely to offer you a mortgage. 

Once you’ve found a BTL mortgage provider willing to lend to a first-time buyer, you still need to meet their eligibility requirements. Typical requirements include:

  • Having an income of at least £25,000 per year

  • Being 21 or older (sometimes 25 or older)

  • Being under 75

  • Having a good credit score

  • Having a deposit of at least 25% 

The property you want to buy will also need to be in good condition, and the potential rental income should be at least 125% of the monthly mortgage payments.

Our expert says...

“Getting a BTL mortgage as a first-time buyer isn’t easy, but it’s not impossible. It can be a good way of getting onto the property ladder if you’re not looking to move home, but you will have more hoops to jump through.

“Speaking to one of our expert advisors is one of the best ways to understand your options, and they can help you find a lender who could offer you a deal.”

Jon Bone \ CeMAP-qualified

First-time buyer buy-to-let mortgages FAQs

If you have a poor credit score, it will be even harder to find a BTL mortgage. However, finding specialist lenders willing to accept your application may still be possible.

However, they will require that you provide a deposit of more than 25% and charge you a higher interest rate on your mortgage.

It is rare, but some mortgage lenders offer guarantor mortgages for buy-to-lets. 

The affordability for BTL mortgages is based on the rental income covering 125% of the mortgage payments and not based solely on the applicant’s income. 

As long as the projected rental income covers this amount, it should be possible for an applicant to be eligible for a mortgage without the help of a guarantor.

Most buy-to-let mortgages do not allow you to live in the property as the landlord. This is to do with how residential mortgages and BTL mortgages are regulated.

BTL mortgages are not FCA-regulated like residential mortgages, and living in a property requires a regulated mortgage.

If your situation changes in the future and you decide you want to live in your rental property, you will need to speak to your lender. You will probably need to remortgage to a residential product in order to live in the property for the long term.

How much your buy-to-let mortgage will cost is dependent on things like:

  • Your loan-to-value (LTV): The higher the LTV, the more you’re borrowing, and the more interest you’ll pay overall. 

  • Your interest rate: Your interest rate will influence how much you pay each month. Even a small increase in interest rate can make a big difference in your payments, so it’s worth trying to get the best deal possible. 

  • Additional fees: There are several fees you need to pay when getting a mortgage, including solicitor fees, stamp duty, arrangement fees and valuation fees.

Having a buy-to-let mortgage and being a landlord comes with a number of other costs, including:

  • Landlord insurance 

  • Income tax on the rent you receive

  • Letting agent fees

  • Maintenance and repair costs

The same stamp duty exemptions apply to both residential and buy-to-let purchases, including first-time buyer relief. 

This means that you will be exempt from stamp duty on properties up to £425,000 as a first-time buyer.  For properties between £425,001 and £625,000, you’ll pay 5% in stamp duty, but only on the value over £425,000. 

Use our stamp duty calculator to work out how much you could expect to pay.

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Important info & marketing claims

You may have to pay an early repayment charge to your existing lender if you remortgage. Your savings will depend on personal circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage.

*The savings figure of £506 is based on Better.co.uk remortgage customers in December 2023. Read more on our marketing claims page.

We can't always guarantee we will be able to help you with your mortgage application depending on your credit history and circumstances.

Average mortgage decision and approval times are based on Better.co.uk's historic data for lenders we submit applications to.

Tracker rates are identified after comparing over 12,000 mortgage products from over 100 mortgage lenders.

As of January 2023, Better.co.uk has access to over 100 lenders. This number is subject to change.

For buy-to-let landlords, there's no guarantee that it will be possible to arrange continuous letting of a property, nor that rental income will be sufficient to meet the cost of the mortgage.