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Buy-to-let mortgages: how to find the best deal

Lenders are cutting mortgage rates for landlords

Lending regulations and tax changes might be causing a headache for landlords at the moment, but mortgage rates in the buy-to-let sector remain competitive.

Last week, NatWest slashed rates and product fees on its buy-to-let range, and while lenders aren’t exactly embarking on a price war, there are plenty of good deals out there for landlords.

Here, we take a look at the trends in the buy-to-let sector, the best deals currently available, and how upcoming changes will affect landlords later this year.


What’s happening with mortgage rates?

The good news for landlords is that the number of deals on the market is increasing, and interest rates are dropping.

The number of buy-to-let mortgage products currently available hit 1,610 in July, having dropped as low as 1,408 in January.

The speed of interest rate cuts has slowed in the last six months, but rates on two year fixed-rate mortgages remain 0.31% lower than a year ago.

Best fixed-rate buy-to-let mortgages

The most eye-catching rates on buy-to-let mortgages are available to buyers with deposits of 40%, and competition is particularly fierce on five-year deals.

Here are the top deals (ordered by initial rate) available at 60% loan-to-value.

Fixed-rate deals: 60% loan-to-value (by initial rate)

Term Lender Initial rate Revert rate APRC Fees
2 year fixed Post Office Money 1.43% 4.74%* 4.2% £1,495
3 year fixed Barclays 1.99% 4.74%* 4.3% £1,950
3 year fixed Virgin Money 1.99% 4.74% 4.4% £1,995
5 year fixed Barclays 2.24% 4.74%* 3.8% £1,950
5 year fixed Leeds Building Society 2.24% 5.74% 4.5% £1,999
5 year fixed Virgin Money 2.24% 4.74% 4.2% £1,995

*4.74% figure calculated as 4.49% plus the Bank of England base rate

Buy-to-let mortgages for first-time landlords

Not all mortgage deals are available for first-time landlords, but there are still some options available to you if you’re taking the plunge for the first time.

Currently, there are only a handful of deals available at an 80% loan-to-value ratio for first-time landlords, but if you can raise an extra 5%, better offers become available.

Fixed-rate deals: 75% loan-to-value (by initial rate)

Term Lender Initial rate Revert rate APRC Fees
2 year fixed Barclays 1.89% 4.74%* 3.6% £1,950
3 year fixed Barclays 2.39% 4.74%* 4.3% £1,950
5 year fixed Barclays 2.79% 4.74%* 4.1% £1,950
5 year fixed HSBC 2.79% 4.75% 4.3% £1,797

*4.74% figure calculated as 4.49% plus the Bank of England base rate

Is it now harder to get a mortgage?

Earlier this year, the Bank of England tightened criteria for buy-to-let landlords, making it harder for some applicants to get a good mortgage deal.

When applying for a buy-to-let mortgage, you’ll need to show that your rental income will be at least 45% higher than your mortgage repayments – up from the 25% previously used by some lenders.

More changes to come for portfolio landlords

The sense of uncertainty in the buy-to-let market shows no sign of dissipating anytime soon.

From the end of September, lenders will apply stricter affordability criteria to landlords who have four or more properties.

Under the new rules, banks will have to review the income and mortgages of each property in your portfolio.

This could push up costs for lenders – and consequently, for landlords too.

All mortgage data sourced from Moneyfacts, correct as of 15 August.

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