Compare Buy To Let 80% LTV Mortgages

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About Buy to Let 80% LTV Mortgages

If you're looking to invest in some property you have plenty of choice with a 20% deposit and an 80% loan-to-value (LTV) mortgage. Compare Buy-to-Let 80% LTV mortgage lenders, mortgage interest rates and arrangement fees in the UK comparison table above.

Think carefully about securing debt against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

Information written by Brean Horne Last updated on 08 February 2022.

Can you get 80% LTV buy-to-let mortgages?

While most lenders seek a higher deposit, 80% LTV buy-to-let mortgages can be available to new landlords who want to buy a property for renting out to tenants and to existing landlords who wish to remortgage to a new mortgage deal.

For mortgage lenders to grant you any buy-to-let mortgage, certain criteria must be met. This will usually require you to:

  • be a homeowner already, or in the process of buying your own home using a mortgage
  • have a good credit score and not be behind on any existing loan repayments
  • earn at least £25,000 a year
  • be of an age now whereby the term on your mortgage will have ended before you reach 70 or perhaps 75, depending on the lender
  • demonstrate that your finances are in a good enough shape for you to accept the potential risks that come with owning a rental property

What is an 80% LTV buy to let mortgage?

Mortgages that have a loan-to-value (LTV) ratio, which represents how much of a property’s value mortgage lenders are willing to offer you as a loan. So with 80% LTV buy-to-let mortgage deals, a lender is offering to let you borrow up to 80% of your rental property’s value. The remaining 20% must be paid up front in the form of a deposit.

As a result, you may find these deals are sometimes referred to as 20% deposit buy-to-let mortgages or, perhaps more commonly, abbreviated to 80% BTL mortgages (where BTL stands for buy-to-let).

How an 80% LTV buy to let mortgage works

As you might expect, 80% LTV buy-to-let mortgages require you to make monthly payments back to the lender. How much you pay will depend on the size of your loan, the mortgage rate you secure, your mortgage term, and the type of BTL mortgage you choose.

In this respect, a buy-to-let mortgage is broadly similar to a residential mortgage, but they are different in a number of ways too. In particular, you’re likely to face higher interest rates and fees for a buy-to-let mortgage, and the 20% deposit required for an 80% LTV buy-to-let mortgage is typically the smallest down payment you’ll need to become a landlord – residential mortgages, in comparison, can often be secured with just a 5% deposit.

Importantly, the majority of buy-to-let mortgages are interest-only mortgages as opposed to repayment mortgages, which dominate the residential market. With interest-only, your mortgage repayments cover the interest on your mortgage but not the actual loan, which instead is repaid when the mortgage term expires. Many landlords plan to meet this major expense through the sale of the property or will secure another mortgage to raise the funds.

How much will you be allowed to borrow?

As with a standard mortgage, your deposit and wider financial circumstances will help a lender decide the amount they are willing to let you borrow. With a buy-to-let mortgage, however, lenders also look at how much you are likely to receive in rent to assess what size of loan repayment you can manage, and therefore the maximum loan you are likely to be offered.

As a general rule, lenders want your predicted rental income to be at least 25% more than the repayments you’ll be making – so the maximum you’re allowed to borrow is worked back from there.

How to choose the best buy-to-let 80% LTV mortgage deals for you

In truth, most lenders prefer landlords to have a minimum 25% deposit, but if 20% is the most you can raise, some 80% LTV mortgages are available.

The most convenient way to start your search is with our comparison tool , which will reveal the best 80% LTV buy-to-let mortgages suitable to you. Simply complete the details regarding property value, loan amount and mortgage term, and the available 80% LTV buy-to-let mortgage deals tailored to your circumstances will appear.

Important information regarding the rates and fees for each deal can be easily compared, along with an indication of how much your monthly repayment is likely to be.

How to apply for an 80% LTV buy-to-let mortgage

To apply for a buy-to-let mortgage, a lender will need to see documents that prove your identity, earnings and income, outgoings and debt obligations. This means you should have ready:

  • your passport or driving licence
  • a utility bill from the past three months
  • payslips, bank statements, P60, or three years’ worth of accounts if you’re self-employed
  • details of outstanding loans and credit cards
  • documents relating to current mortgages.

You’ll also need to provide evidence of your expected rental income. To do this, you could ask letting agents about the current rents being charged for similar properties, or search online or in the local press for rental listings.

Advantages of an 80% LTV buy-to-let mortgage

The benefits of an 80% LTV buy-to-let mortgage are:

  • You’re getting a property investment with the smallest deposit possible.
  • A rise in property prices should see the value of your rental property rise.
  • The rent you receive is paying your BTL mortgage and hopefully providing extra income for you on top.
  • Certain landlord expenses are tax deductible, such as repair costs, agency fees, landlord insurance, and bills that you pay.

Disadvantages of an 80% LTV buy-to-let mortgage

The potential drawbacks of an 80% BTL mortgage are:

  • The pool of buy-to-let options at 80% LTV is relatively limited – save a bigger deposit to significantly widen your choice.
  • Because a 20% deposit is generally the smallest required for a buy-to-let mortgage, interest rates at 80% LTV are typically higher.
  • With a buy-to-let interest-only mortgage, you need to have in mind how you’ll repay the original loan amount, which isn’t covered by your repayments. This can be made more difficult if the value of your property falls, as you might not raise enough to cover the capital repayment if you’re planning to sell, and could find it hard to remortgage.
  • Repayments on a buy-to-let mortgage must still be paid even if your property stands empty with no tenants.

Can you get 80% LTV buy to let mortgages?

Whilst most lenders seek a higher deposit, 80% LTV buy to let mortgages can be available to new landlords who want to buy a property for renting out to tenants and to existing landlords who wish to remortgage to a new mortgage deal.

For mortgage lenders to grant you any buy to let mortgage, certain criteria must be met. This will usually require you to:

  • be a homeowner already, or in the process of buying your own home using a mortgage.
  • have a good credit score and not be behind on any existing loan repayments.
  • earn at least £25,000 a year.
  • be of an age now whereby the term on your mortgage will have ended before you reach 70 or perhaps 75, depending on the lender.
  • demonstrate that your finances are in a good enough shape for you to accept the potential risks that come with owning a rental property.

What is an 80% LTV buy to let mortgage?

Mortgages have a loan-to-value (LTV) ratio which represents how much of a property’s value mortgage lenders are willing to offer you as a loan. So with 80% LTV buy to let mortgage deals, a lender is offering to let you borrow up to 80% of your rental property’s value. The remaining 20% must be paid for upfront in the form of a deposit.

As a result, you may find these deals are sometimes referred to as 20% deposit buy to let mortgages, or perhaps more commonly, abbreviated to 80% BTL mortgages (where BTL stands for buy to let).

How an 80% LTV buy to let mortgage works

As you might expect, 80% LTV buy to let mortgages require you to make monthly payments back to the lender. How much you pay will depend on the size of your loan, the mortgage rate you secure, your mortgage term, and the type of BTL mortgage you choose.

In this respect, a buy to let mortgage is broadly similar to a residential mortgage, but they are different in a number of ways too. In particular, you’re likely to face higher interest rates and fees for a buy to let mortgage, and the 20% deposit required for an 80% LTV buy to let mortgage is typically the smallest down payment you’ll need to become a landlord - residential mortgages, in comparison, can often be secured with just a 5% deposit.

Importantly, the majority of buy to let mortgages are interest-only mortgages as opposed to repayment mortgages, which dominate the residential market. With interest-only, your mortgage repayments cover the interest on your mortgage but not the actual loan, which instead is repaid when the mortgage term expires. Many landlords plan to meet this major expense through the sale of the property or will secure another mortgage to raise the funds.

How much will you be allowed to borrow?

As with a standard mortgage, your deposit and wider financial circumstances will help a lender decide the amount they are willing to let you borrow. With a buy to let mortgage, however, lenders also look at how much you’re likely to receive in rent to assess what size of loan repayment you can manage, and therefore the maximum loan you’re likely to be offered.

As a general rule, lenders want your predicted rental income to be at least 25% more than the repayments you’ll be making - so the maximum you’re allowed to borrow is worked back from there.

How to choose the best buy-to-let 80% LTV mortgage deals for you

In truth, most lenders prefer landlords to have a minimum 25% deposit, but if 20% is the most you can raise, some 80% LTV mortgages are available.

The most convenient way to start your search is with our comparison table, which will reveal the best 80% LTV buy to let mortgages suitable to you. Simply complete the details regarding property value, loan amount and mortgage term, update results and the available 80% LTV buy to let mortgage deals will appear.

Important information regarding the rates and fees for each deal can be easily compared, along with an indication of how much your monthly repayment is likely to be.

How to apply for an 80% LTV buy to let mortgage

To apply for a buy to let mortgage, a lender will need to see documents that prove your identity, earnings and income, outgoings and debt obligations. This means you’ll need to have to hand:

  • Your passport or driving licence
  • A utility bill from the past three months
  • Payslips, bank statements, P60, or three years’ worth of accounts if you’re self-employed
  • Details of outstanding loans and credit cards
  • Documents relating to current mortgages.

You’ll also need to provide evidence of your expected rental income. To do this, you could ask letting agents about the current rents being charged for similar properties, or search online or in the local press for rental listings.

Advantages of an 80% LTV buy to let mortgage

The benefits of an 80% LTV buy to let mortgage are:

  • It’s the path to property investment with the smallest deposit possible.
  • A rise in property prices should see the value of your rental property rise too.
  • The rent you receive is paying your BTL mortgage and hopefully providing extra income for you as well.
  • Certain landlord expenses are tax deductible, such as repair costs, agency fees, landlord insurance, and bills that you pay.

Disadvantages of an 80% LTV buy to let mortgage

The potential downfalls of an 80% BTL mortgage are:

  • The pool of buy to let options at 80% LTV is relatively limited - save a bigger deposit to significantly widen your choice.
  • Because a 20% deposit is generally the smallest you can have for a buy to let mortgage, interest rates at 80% LTV are generally high.
  • With a buy to let interest-only mortgage, you need to have in mind how you’ll repay the original loan amount, which isn’t covered by your repayments. This can be made more difficult if the value of your property falls, as you might not raise enough to cover the capital repayment if you’re planning to sell, and could find it hard to remortgage.
  • Repayments on a buy to let mortgage must still be paid even if your property stands empty with no tenants.

Buy-to-Let 80% LTV Mortgages FAQs

Is 80% LTV better for first-time buyers?

As a higher LTV mortgage equates to a lower deposit, if you’re buying your first property, you’re likely to find an 80% LTV mortgage an attractive proposition. Remember, however, that the higher the LTV, the greater the risk a lender is taking on, and so the higher the interest you’re likely to pay.

Are there alternatives to a buy-to-let mortgage at 80% LTV?

If you can provide a larger deposit than 20%, then yes, there are alternatives to an 80% LTV buy-to-let mortgage. In fact, there are far more buy-to-let mortgages available at 75% LTV (so requiring a 25% deposit). If you save extra hard there are usually plenty of 70%, 65% and 60% LTV buy-to-let mortgages from which to choose too.

» COMPARE: More buy-to-let mortgages

What is the difference between interest-only and repayment?

Essentially, the difference between these two types of mortgage boils down to what is covered by your monthly repayments. With a repayment mortgage your monthly sum is used to pay off both your original mortgage loan amount and the interest, with a view to everything being fully paid back by the time the mortgage term ends.

With an interest-only mortgage, your repayments cover only the interest that is due each month, and won’t chip away at the actual mortgage itself – instead, this will need to be paid off all in one go at the end of the mortgage.

Are there extra taxes for an 80% LTV buy-to-let mortgage?

The taxes you can expect to pay for an 80% LTV buy-to-let mortgage are the same as you would pay with any BTL mortgage. These can include:

  • Stamp duty: this is payable when buying a new property, but for buy to let, you’ll need to add 3% to the usual rates.
  • Income tax: rental income is subject to income tax, although expenses incurred for repairs and maintenance, insurance, fees paid to letting agencies, and bills paid by landlords are deductible. Mortgage interest costs used to be deductible, but this has now changed to a tax credit instead.
  • Capital gains tax: if and when you decide to sell your property, prepare for any profit to be subject to capital gains tax.

Are 80% LTV buy-to-let mortgages impacted by my credit score?

Your credit score will be important in determining whether a lender is willing to offer you a buy-to-let mortgage. The better your score, the more likely you are to get the mortgage you want. A higher credit score might also qualify you for the very best 80% LTV buy-to-let mortgages and lowest rates.

Can I get an interest-only buy-to-let mortgage?

Yes, in fact, there are far more interest-only buy-to-let mortgages available to landlords than repayment mortgages.

Can I get a standard mortgage instead?

No, if you’re buying with the intention of renting out a property, you’ll need a buy-to-let mortgage.

What are the benefits of using the NerdWallet buy-to-let comparison tool?

By answering a few short questions, our comparison tool will narrow down your search so that you’ll only see the 80% LTV buy-to-let mortgages that match your search criteria. It saves you time sorting through the deals and gives you the best chance of finding the right buy-to-let mortgage for you.

About the author:

Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more

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