In order to qualify for a buy to let mortgage, lenders require that you raise a minimum deposit of 15% to put towards the purchase of your new rental property. This arrangement is known as an 85% loan to value (LTV) mortgage.
Though 85% LTV is the upper limit at which lenders will grant loans, the majority of lenders extend only to 75% or 80% LTV. This means that, for a typical buy to let purchase of £100–120,000, you will need a deposit of at least £25–30,000 to fit most lenders’ criteria.
However, we can find lenders who will lend up to the 85% LTV maximum, meaning that the deposit needed for a typical purchase will in fact be around £15–18,000.
What is the smallest deposit a lender will accept?
The smallest deposit that a lender will accept, in cash terms, is determined by both the maximum LTV at which they will lend, and the minimum property value they will lend against.
We can access lenders who will finance properties worth £40,000 at 75% LTV, and lenders who will finance properties worth £50,000 at 80% LTV. This means that the very smallest deposit required – not taking into account other start-up costs such as fees – is £10,000.
To find out how we might be able to help you secure a low-deposit buy to let mortgage, get in touch with us on one of the numbers at the top of this page or request a quote.