Navigating the buy-to-let mortgage market can feel overwhelming. Between lender stress tests, tax changes, and product choice, many landlords aren’t sure which options are right for them.
At NetRent, we receive questions from landlords every day about how mortgages work, what lenders look for, and how to protect rental profits in a changing market. Here are answers to some of the most common landlord mortgage questions in 2025.
Q1: Can I still get interest-only buy-to-let mortgages?
Yes — interest-only remains the most common structure for buy-to-let mortgages.
With an interest-only mortgage, you only pay the interest each month, keeping repayments lower and improving monthly cash flow. This is attractive to landlords because:
- Rental income is maximised as less of it goes to mortgage payments.
- Flexibility: you can repay the capital when selling the property, refinancing, or through other means.
- Portfolio growth: lower monthly payments can free up cash to invest in additional properties.
That said, lenders want reassurance that you have a realistic repayment strategy for the capital. This could be property sale, savings, or other investments.
Q2: Is it better to buy through a limited company or my own name?
This is one of the most frequently asked questions — and the answer depends on your tax situation and long-term plans.
- Buying in your personal name:
- Easier process and more lenders available.
- Typically lower interest rates and fees.
- Simpler paperwork and accounting.
- BUT: since 2020, mortgage interest tax relief has been restricted, which significantly reduces profits for higher-rate taxpayers.
- Buying through a limited company:
- Mortgage interest is still treated as a business expense and fully deductible before corporation tax.
- Corporation tax rates (19–25%) are usually lower than higher-rate personal income tax.
- Often more tax-efficient for landlords with larger portfolios.
- BUT: fewer lenders, higher interest rates, and extra costs for company setup and accountancy.
In short:
- If you’re a basic-rate taxpayer with one or two properties, buying in your own name may still be cost-effective.
- If you’re a higher-rate taxpayer or planning to build a portfolio, limited company ownership often makes more financial sense.
Q3: How much deposit do I need for a buy-to-let mortgage?
Most lenders require a minimum of 25% deposit (75% loan-to-value).
In some cases, particularly with strong applications or certain property types, lenders may allow 20% deposits. However, the lowest rates are usually reserved for landlords with 40% deposits (60% LTV).
Tip:
- A larger deposit reduces your risk to the lender → lower interest rates.
- For landlords with equity in existing properties, remortgaging to release funds can be a smart way to raise a deposit for the next purchase.
Q4: How do stress tests affect how much I can borrow?
Lenders don’t just look at today’s mortgage payments. They apply a stress test to ensure your rental income can cover repayments if interest rates rise.
- Typical stress rates in 2025: 5.5%–6.5%.
- Rental income usually needs to cover the stressed mortgage payment by 125%–145%.
- HMOs and limited company mortgages can face stricter coverage ratios.
Example:
- Loan: £200,000
- Stress rate: 6% = £12,000/year in interest
- Required coverage at 145% = £17,400/year rental income
If your property doesn’t meet this threshold, you may need to:
- Increase the rent (if the market allows).
- Choose a 5-year fixed rate, as lenders often apply a lower stress test.
- Add personal income (known as “top slicing”) if permitted.
Q5: Should I remortgage now or wait for rates to fall?
This is a critical decision in 2025. Many landlords are tempted to wait, hoping that rates will fall further. But waiting can cost more in the long run.
Here’s why:
- SVRs are expensive. If your deal ends, you could move onto your lender’s standard variable rate — often 2–4% higher than the best deals.
- Lost profits add up. Even a £200 difference per month = £2,400 a year lost.
- Rates are unpredictable. While economists expect gradual cuts, lenders often price in expectations in advance. By the time cuts happen, deals may already reflect them.
Our advice: If your deal is ending soon, it usually makes sense to remortgage now and secure stability with a competitive fixed rate.
Final Thoughts
Landlords face unique challenges in today’s mortgage market, from tax changes to tougher affordability checks. The good news is, with the right advice, you can structure your mortgages to protect profits, grow your portfolio, and avoid costly mistakes.
Speak to the Experts
At NetRent, we specialise in helping UK landlords secure competitive buy-to-let and remortgage deals. Whether you’re buying your first property, managing a portfolio, or simply looking to save money, our team will guide you through the options.
📞 Call us today on 01352 721300
🔗 Or request a free consultation: The Complete Mortgage Solution