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Using low deposit buy-to-let mortgages

The maximum borrowing we can secure for experienced landlords is 85% loan to value (85% of the property value). This means 15% is the required deposit for a buy to let mortgage.

If you are a new landlord we can secure up to 80% loan to value on a buy to let mortgage. Your deposit must be a minimum of 20% of the property value.

It is not currently possible for us to secure a buy to let mortgage with a deposit lower than 15% of the property purchase price, this rules out 10% deposits and 100% mortgages.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE

Whilst the range of products available grows with the amount you can raise for your deposit, it is still possible to make a favourable investment in rental property with a low deposit.

Percentage deposit required for a buy to let mortgage by property value

How much deposit for a buy to let mortgage
Value 15% deposit 20% deposit 25% deposit
£100,000 £15,000 £20,000 £25,000
£150,000 £22,500 £30,000 £37,500
£200,000 £30,000 £40,000 £50,000
£250,000 £37,500 £50,000 £62,500
Key Partner of Legal & General Mortgage Club

Important points to remember about a buy to let mortgage deposit:

  1. 15% is currently the lowest deposit size we can access for a buy-to-let mortgage
  2. When you have 40% deposit or more this normally means access to best available rates
  3. Your buy-to-let deposit cannot come from an unsecured loan

Whilst the range of products available grows with the amount you can raise for your deposit, it is still possible to make a favourable investment in rental property with a low deposit.

Understanding LTV on low deposit BTL mortgages

Whilst looking for a low deposit BTL mortgage you may have come across the term ‘high loan to value’.

Loan to value (LTV) is simply the portion of the property value for which you require the mortgage.

For example, if you are able to raise only 15% of the property value to put down as a deposit (the minimum you’d need for a low deposit mortgage) then you would need an 85% LTV mortgage.

You can review 85% LTV mortgage options for both HMO and Limited Companies

Benefits of a low deposit mortgage

A low deposit mortgage is likely to be beneficial to you if your circumstances fall into the following categories:

  • Buying your first rental property and cannot raise a lot of capital
  • Expanding your portfolio and taking a small amount of equity from one property to invest in buying the next.
  • Spread risk across multiple properties by splitting capital into multiple low deposits.

Drawbacks of a low deposit mortgage

  • Higher interest rates
  • Fewer lenders to choose from
  • Potentially higher lender fees

Limited funds to invest?

Whilst you may be thinking about a low deposit, there are other ways to minimise your capital outlay.

A number of buy to let mortgage products come without lender fees. Some lenders offer free valuations.

Also, as long as you don’t exceed any maximum LTV terms stipulated by the lender, many will allow you to add the survey, conveyancing and other fees to the loan value.