Can I get a low deposit buy to let mortgage?
Yes, you can get a low deposit buy to let mortgage by putting down a minimum of 15% of the property value. However, you may not need a cash deposit at all, if you own other property you can borrow against, see below for details.
Factors that may impact you getting a low deposit buy to let mortgage
- Some types of poor credit
- The value of the property being less than you expected
If you have questions, chat to our advisors on live chat, via the phone, or get a call-back we're here to help.
Today's low deposit buy to let mortgage rates
To compare today’s low deposit buy to let mortgage rates click through to our buy to let mortgage calculator.
- First time buyers to experienced landlords
- You must be over 18 years old
- Minimum deposit 15% of the property value
- Upper age limits at application are flexible
- Low personal incomes are accepted
- Property, pension and employment income is OK
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We work with a range of over 80 UK buy to let mortgage lenders, including:
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- The minimum buy to let mortgage deposit is 15%
- Adding to a cash deposit with a 2nd charge or releasing equity
- No minimum income options
- Lenders with no upper age limits
- Flexible affordability calculations
- 2, 3, 5 and 10 year deal periods
- Cashback, free valuation and other incentives available
- Unlimited portfolio sizes
- Houses of Multiple Occupation (HMO) options with no maximum number of bedrooms
- Multi-unit blocks with no maximum number of bedrooms
- Special Purpose Vehicle (SPV) buy to let accepted
- Trading limited company buy to let accepted
- First time buyers and first time landlords accepted
- Repayment or interest-only mortgage payment options
Costs involved in a low deposit buy to let mortgage
We charge a broker fee for our work. You pay in two parts. A booking fee, once we have found you a mortgage deal, at application. The majority of our fee is paid at completion of the mortgage.
Every mortgage comes with monthly mortgage costs based on the mortgage interest rate the lender charges. These are paid on either an interest-only or capital repayment basis.
Your advisor will call to discuss the product they have found for you. You will be presented with one mortgage, that is the best match for all your needs and offers you the most cost effective option.
On your instruction, your advisor will submit your mortgage application. Your account manager then does all liaison and administrative work to complete the deal, whilst keeping you updated at every step.
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You can get a low deposit buy to let mortgage by putting down a minimum of 15% of the property value. However, you may not need a cash deposit at all if you own other property that you can borrow against.
To clarify on both points above, there are a huge array of buy to let mortgage products in the marketplace. Each product has its own terms and conditions, or ‘criteria’ that have to be met to be successful in being accepted by the lender.
The minimum deposit currently available is 15% of the property value. So, if you were buying a rental property worth £250,000, you would need to put down £37,500 as a buy to let deposit.
If you do not have this money in cash, there are other ways you could raise it. Say you own the property you live in, with or without a mortgage, you may be able to raise the funds for a deposit from available equity in the property.
Similarly, if you own another rental property, you could raise a buy to let deposit for another purchase from that too.
You cannot get a buy to let mortgage with no deposit, however, you may be able to raise a deposit in ways you haven’t considered.
You could borrow against or ‘leverage’ equity in another property.
This can be done by remortgaging your property to release any available equity in it to use as a buy to let deposit. This is called remortgaging to ‘release capital’.
Second charge mortgages are another way of raising a buy to let deposit from a property you own. A second charge mortgage sits alongside any existing borrowing (e.g. a mortgage) on a property.
The advantage of a second charge mortgage is that your primary borrowing doesn’t need to be changed. This is beneficial if you are still within the deal period of your mortgage, meaning you are subject to paying ‘early repayment charges’ (ERCs), if you remortgage. Alternatively, you might have a low rate mortgage you don’t want to touch.
Clearly remortgaging to raise a buy to let deposit, or taking a second charge mortgage to do so, extends your overall borrowing, so it should be done with appropriate caution and only if it is affordable to you.
If you don’t own other property that you can borrow against, your only route to securing a deposit for a first time buy to let is to raise the cash, then you will need at least 15% of property value.
For example, if the property you are interest in is worth £180,000, you would need at least £27,000 to achieve a 15% deposit.
Be aware that interest rates may vary a lot within a fairly small variance in deposit amount. Rather than borrowing with a 15% deposit, if you could raise an additional 5% to get to a 20% deposit, you may find interest rates are a lot lower.
Bear in mind that there are other costs when investing in buy to let. These include legal fees and mortgage product fees. Where you are not borrowing at the maximum loan to value threshold, some fees can be added to the loan amount with some lenders.
Getting into property investment for the first time may mean you have no choice but to use a low deposit buy to let mortgage.
Similarly, even if you are investing in a second, third, fourth or fifth property, you may only be in a position to raise a small buy to let mortgage deposit.
Typically, the more you put down as a deposit, the lower the mortgage interest rates are. This is because the more you put down, the more risk you are taking on in the agreement with the lender.
There is no reason why you shouldn’t invest in buy to let with a low deposit, but there are pros and cons to consider.
One thing to bear in mind is that if property prices fall and you have only put down a small deposit, you are more at risk of falling into negative equity, where the property value falls below the amount you paid for it.
To explain this point, if you bought a property worth £200,000 with a 15% deposit of £30,000, you would owe the lender £170,000.
If the property value fell to £155,500, you would be at 110% loan to value, putting you in negative equity. This would prevent you remortgaging, unless you could find extra money to top up your borrowing with.
If you bought the same property worth £200,000 but with a bigger deposit, for example £83,600, you would owe the lender £116,400.
If the property value fell to £145,500, you would be at 85% loan to value, so you would not be in negative equity. There are buy to let mortgages available at the loan to value threshold, so you could still remortgage (if this scenario played out at the time your mortgage renewal date came around).
Ultimately, as long as the mortgage is affordable for you, there is nothing to stop you investing in buy to let with a low deposit, nor is there anything wrong with doing so.
Taking out a buy to let mortgage with a low deposit can be beneficial, as it might allow you to invest in two or more properties, rather than just one. By doing that, you have multiple rental income streams, which could mean the total income you receive exceeds the amount you would have achieved from just one property.
Investing in multiple properties, rather than one, could also lessen the financial impact on you, if you have a period when a tenant moves out and one of your properties is empty with no rent coming in.
Yes, you can currently get a mortgage with a 15% deposit.
You may be able to increase a cash deposit by taking a second charge out on another property you own, or by raising capital from the equity in another property you own. Talking to a broker can be useful in investigating the options to you.
Sometimes 85% LTV deals are withdrawn from the market. During the Coronavirus pandemic, 15% deposit buy to let mortgages were temporarily unavailable, but came back into the market after lockdown.
15% deposits were recently again made unavailable, likely because property values were expected to decline, as a result of the wider downturn in the UK economy. But, they are currently available. This emphasizes the importance of securing a deal you want when you see it is available, because lenders can make changes at any time.
Yes, you can get a buy to let mortgage with a 20% deposit. It is worth comparing mortgage interest rates at different deposit amounts, because you might find that 5% extra on your deposit at each deposit threshold makes a big difference to the mortgage interest rates available to you.
No, you cannot get a buy to let mortgage with 10% deposit, unless you have other property you can borrow against, to get at least 15% of the property value together.
Remember, there are other costs associated with a buy to let mortgage than just the deposit, and also wider costs associated with managing a rental property.
So, if you are struggling to raise funds for a deposit, it might be better to wait until you can save up a larger amount, or look at investing in a lower value property so that your deposit amount constitutes a larger percentage of the property value.
Investing in a lower value property does not necessarily mean the yield you achieve is less than a bigger, more expensive property.
No, you can invest in rental property with as little as 15% deposit, or even no cash from your pocket at all, if you can raise a deposit by borrowing against other property you own.
Many websites talk about needing a 25% deposit for a buy to let mortgage, because it is at this threshold where a larger number of lenders offer buy to let mortgage deals. Whereas, once you reduce your deposit to 20%, there are fewer deals on offer from fewer lenders.
As a general rule, interest rates do become lower the more you put down as a deposit, which is likely to mean the monthly mortgage payment becomes lower as a result. The maximum amount of deposit you put down, at which point rates don’t tend to go any lower is 40% of the property value.
The minimum amount of cash you have to put down on a buy to let mortgage is currently 15% of the value of the property you are buying.
If you are struggling to raise a deposit, you might consider using equity in other property you own to raise the necessary funds.