80% Buy to Let Mortgages
When people talk about an 80% buy to let mortgage, what they mean is a mortgage which allows you to borrow 80% of the cost of the property you want to borrow. This percentage figure is known as an LTV or loan to value ratio e.g. if you loan is 80% of the value of the property you have an 80% LTV.
Many lenders prefer to only go up to between 60-75% LTV for buy to let mortgages as this is seen as a riskier form of borrowing than a traditional mortgage. To find a lender willing to offer 80% buy to let finance, you will likely need to speak to a mortgage advisor or use a mortgage calculator.
Who can get an 80% Buy to Let mortgage?
Lenders will be more likely to offer mortgages of 80% to experienced buy to let landlords with a track record of success in repaying their loans than to first time landlords.
However, this will depend on a range of factors, so first time buyers may still be able to access buy to let mortgages of 80% under certain circumstances.
Lending criteria for Buy to Let finance
When applying for any type of buy to let finance there are several general requirements many lenders will specify. These requirements do vary from lender to lender, however, so even if you don’t match them, you may still be able to access buy to let finance from some providers.
To stand a good chance of qualifying for a buy to let mortgage, you should:
- Own your own home
- Earn £25,000+ per year
- Be over 25
- Be less than 70 when the mortgage term ends
- Have a good credit history
If you do not match these criteria, a mortgage advisor should be able to guide you towards the lenders and products most likely to let you access the funds you need.
Interest rates on 80% Buy to Let mortgages
The interest rates you pay on a buy to let mortgage will depend on several things, including:
- The amount you borrow
- How long the mortgage is for
- Your Loan to Value (LTV) ratio
- The type of mortgage you choose
If you choose a fixed rate buy to let mortgage your interest rate will be set at an agreed level for the first 2-5 years of the mortgage term, giving you more predictability with your repayments. After the fixed rate period your mortgage will normally switch to a standard variable rate.
A tracker mortgage will give you interest rates that are set at a pre-determined percentage above the Bank of England Base Rate or an equivalent. This means your interest payments should stay broadly in line with inflation.
A discounted rate mortgage will let give you a reduced rate of interest for a set period, often the first 2-5 years of your mortgage term, making your borrowing more affordable in the short term. After this you will normally pay a standard variable rate of interest.
It is worth remembering when looking at an 80% LTV mortgage that most lenders will tend to charge higher interest rates on mortgages with a higher LTV. You may therefore get a better interest rate if you can afford to apply to a lower LTV mortgage.
Compare Buy to Let mortgage rates
Our free mortgage calculator lets you quickly and easily compare different mortgage deals from across the market so you can find the best value on your buy to let mortgage. All you need to do is follow the link and choose “Buy to let” from the “Reasons for mortgage” drop down.