Buy to Let Mortgage Deposit Explained for UK Landlords

Landlords

Posted in Jan 05 , 2026

With the help of this guide, you can know how lenders calculate and judge this deposit. It will help you better prepare your finances and make clearer, more confident decisions about your property investment.

How Much Is a Buy to Let Mortgage Deposit in the UK?

In most cases, the lender requires a minimum deposit of 25% for buy to let mortgage. It means the maximum loan to value (LTV) offered is about 75% of the property value.

Some lenders do offer buy to let products with a 20% deposit, but these are less common and often come with higher interest rates. For most landlords, especially first-time investors, a 25% deposit remains the standard starting point.

Why Buy to Let Deposits Are Higher Than Residential

Buy to let mortgages are assessed differently from residential loans. The lenders view rental property as higher risk because the repayments rely on the rental income rather than a personal salary.

To protect themselves, lenders ask for a higher buy to let mortgage deposit and apply rental affordability stress tests. This approach ensures that the rent can still cover mortgage payments if interest rates rise.

Why Rental Stress Tests Matter?

Even with a healthy deposit, the amount you can borrow depends heavily on the expected rental income.

Most lenders use an Interest Coverage Ratio (ICR) to assess affordability, because they want the monthly rent to exceed the mortgage interest by a set margin. Common benchmarks are around 125% for basic-rate taxpayers and higher for others.

This is where many investors run into issues. A property might seem affordable based on price alone, but if the achievable rent is too low, the lender may reduce the loan amount or decline the application.

What Affects the Deposit You’ll Need?

Several factors influence how much deposit a lender will ask for.

Type of Property: Standard houses and flats are usually easier to finance than HMOs or mixed-use buildings.
Your Experience as a Landlord: First-time landlords may face stricter criteria than those with an established portfolio.
Buying in a Limited Company: It can affect deposit requirements, as lenders assess these applications differently from personal buy to let mortgages.
Your Profile: The credit profile and the length and type of mortgage product you choose can influence both deposit size and interest rate.

Costs to Budget Alongside the Deposit

When planning a buy to let purchase, it’s important not to focus solely on the mortgage deposit.

Landlords should also allow for:

Stamp duty on additional properties
Legal and survey fees
Mortgage arrangement and broker costs
Initial refurbishment or compliance work
Letting and property management fees

Buy to Let Mortgage Deposit Examples

If you’re buying a rental property for £400,000, a typical 25% buy to let mortgage deposit would be £100,000, leaving a mortgage of £300,000.

With a 20% deposit, you’d need £80,000, but borrowing more may increase your interest rate and make rental stress testing tighter. This is why many landlords still choose to put down a larger deposit even when lower-deposit products are available.

Is Buy to Let Still Worth It?

Although deposit requirements are higher than in the past, buy to let remains attractive for many landlords. Rental demand across South London and surrounding areas remains strong, particularly in well-connected locations close to transport, schools, and local amenities.

The key is buying the right property at the right price, with a realistic view of achievable rent and long-term costs. A well-structured purchase with the right buy to let mortgage deposit can still deliver stable returns.

How Cribs Estates Helps Landlords

We help landlords to buy smarter by providing realistic rental deals, local demand insights, and advice on which properties are most likely to meet lender requirements.

We support buyers from the initial property search through to tenant placement and full property management.

Planning a buy to let purchase? Speak with our experts today.

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Buy to Let Mortgage Deposit Explained for UK Landlords

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