Buy-To-Let Mortgages for First-Time Landlords

Property118

Buy-To-Let Mortgages for First-Time Landlords

Getting started in property investment can feel daunting, particularly in today’s mortgage market. First-time landlords face stricter criteria, larger deposit requirements and higher scrutiny from lenders compared with experienced investors. But with preparation and the right guidance, it is still possible to secure competitive finance and start building a rental portfolio in 2025.

Who Counts as a First-Time Landlord?

A first-time landlord is someone buying their first rental property. Some lenders also class you as a first-time landlord if you have not previously let property, even if you own your own home. A smaller number may also combine this with “first-time buyer” criteria, where you do not yet own any property at all. These factors can restrict product choice.

What Lenders Look For

Most lenders want reassurance that first-time landlords can manage the responsibilities of letting property. Typical requirements include:

• Larger deposits – usually 25% or more of the property value.
• Minimum income – often £25,000+ from employment or self-employment, to demonstrate financial stability.
• Clean credit history – no recent defaults, CCJs or missed payments.
• Rental income affordability – the property must meet 125%–145% coverage of mortgage interest at a stress-tested rate.

Deposit and Loan-to-Value Rules

While experienced landlords may occasionally access products up to 80% LTV, most first-time landlord mortgages are capped at 75% LTV. This means a £200,000 property would require a deposit of at least £50,000, plus stamp duty, legal fees and a contingency fund.

Worked Example: Affordability Test for a First-Time Landlord

Scenario: Property value £180,000. Loan £135,000 (75% LTV). Product rate 5.5% fixed. Annual interest £7,425 (£618.75 monthly).

At 145% coverage: Rent must be at least £10,766 per year (£897 per month).
At 125% coverage: Rent must be at least £9,281 per year (£773 per month).

If rent is £850 per month, the application would pass at 125% but fail at 145%. This shows the importance of choosing the right lender.

Common Pitfalls for New Landlords

• Overestimating rental income – valuers may take a cautious view, reducing affordability.
• Underestimating costs – repairs, voids, management fees and compliance costs all eat into returns.
• Choosing the wrong property – low-yield flats in city centres often fail affordability tests for first-time landlords.
• Lack of preparation – missing payslips, ID documents or tenancy projections delay applications.

Tips for First-Time Landlords Applying in 2025

• Save a deposit of at least 25% and budget extra for costs.
• Choose a property with strong rental yield to make affordability easier.
• Keep your credit file clean and limit personal debt.
• Consider using a broker with access to lenders open to first-time landlords.
• Have all documents ready – proof of income, bank statements and ID.

Case Study: A Successful First Application

Scenario: A first-time landlord earning £40,000 a year in employment applied for a buy-to-let mortgage on a two-bed terrace at £150,000.

Solution: With a £40,000 deposit and £110,000 loan, the lender applied a 125% coverage rule. Rent of £750 per month passed the stress test comfortably.

Outcome: The landlord secured a five-year fixed mortgage, gaining stable payments and successfully entering the rental market.

Final Thoughts

First-time landlords face stricter hurdles, but competitive mortgages are still available in 2025. The key is preparation: strong deposits, realistic rental assumptions and clean financial records. With the right property and lender match, becoming a landlord is achievable even in a tougher mortgage market.

Speak to Our Sponsor

Our sponsor works daily with first-time landlords, helping them prepare applications, choose suitable lenders and enter the buy-to-let market with confidence.

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Publication date: Monday, 15 December 2025

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