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Published on : August 31, 2018 11:11

landlords deposit

What’s the average buy-to-let mortgage deposit?

Buy to lets can be a great investment and a safer place to invest your money. One of the most frequently asked questions from people when they’re considering a buy to let mortgage is how it differs from regular residential mortgages, especially regarding the deposit.  Read our article to understand your options, exceptions to the rule and the key things to consider when stumping up your buy-to-let deposit.

In a nutshell, you’ll typically find you’ll need to save 25% of the properties value as a deposit. So if you want to purchase a property for £100,000 you’ll need at least £25,000 as a deposit to be considered by a lender. Keep in mind this is still just a rough estimate and this can be more/less depending on the mortgage lender, property, and location.

Buy-to-let mortgage deposits: why are they different?

Buy to let properties are considered a higher risk to lenders than residential ones. Because of this securing one requires a higher capital investment at the outset. Along with bigger deposits, lenders may also charge a higher interest rate and asses your application with different criteria.

How much buy-to-let deposit do I need?

Again, around 25% of the properties purchase price. But this does often vary between 25 – 40%.

Lenders have specific rules that help guarantee you can afford the properties monthly repayments. For example, you’d need to charge monthly rent around 25 – 35% more than your mortgage payments. Along with this new builds are considered riskier investments so keep that in mind when on the property search.

Will a bigger buy-to-let deposit get me a better mortgage deal?

Some lenders do offer specific deals on mortgages that have been secured with a higher deposit. Fixed interest rates tend to be very low for buyers with a big deposit, but they also come with big fees and charges, so it’s best to speak to a broker, take them through your situation and work out what’s best, rather than going for a short-term gain.

Expert buy to let advice

If your considering a buy to let mortgage it helps to speak to an expert. Our financial services team have been helping investors take that first step for over 30 years. For free no-obligation advice give our team a call today on 0161 443 4548, or complete our contact form here.

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