Buy to Let Mortgages for First Time Buyers


Getting a buy-to-let property as a first time buyer can seem like a somewhat difficult task, however, it is possible. 

At Go2Mortgage, we can give you all the support you need to ensure you secure a mortgage deal with a lender, as well as finding the best deals out there to suit your specific needs.

Can a first-time buyer get a buy-to-let mortgage?

Yes, first-time buyers can get a buy-to-let mortgage; however, most lenders will view you as high risk – this is because you’ve yet to actually own a property.

Not every lender will actually accept first-time buyers either, and they may only offer buy-to-let mortgages to existing homeowners. 

A first time buyer is advised to purchase their own home before becoming a landlord. Once you have your first mortgage, lenders will be able to see whether or not payments are made on time or not. 

If all your payments are in order and on time, you have a higher chance of getting a buy-to-let mortgage. 

Is it illegal to rent out a house without a buy-to-let mortgage?

Although this is technically not illegal in every instance, you could actually breach the contract between yourself and your mortgage lender or worse, you could potentially be committing fraud. 

If you own the property outright or have paid for it in cash, you can use the property however you wish. You will need to tell your lender as soon as possible that you wish to rent it out though. 

If you intend to buy a property and rent it out to tenants, you must use a buy-to-let option. 

If you have a residential mortgage and want to change how you use it, some lenders may consider giving you a ‘Permission to let’ or a ‘Consent to let’ offer if you’ve owned the property for a certain period of time. 

Can you get a first-time buyer buy-to-let mortgage through a limited company?

Yes, it is possible to get a buy-to-let mortgage through a limited company but this won’t increase your chances of application being accepted. 

You may find that you have to provide more background information to secure a mortgage, and more often than not, the lender will still want to underwrite the application as they would a residential mortgage.

You will need a lender that will lend to limited companies and to first time buyer landlords.

First time buyer buy-to-let mortgage criteria

As a first time rental property buyer, you may find that you have less options available to you from mortgage providers. However, this is not something to stress over. 

There are a number of providers who will consider applications from those who don’t own their home.

Criterias can vary depending on the lender, but many require the following criteria to be met:

  • Larger deposits (The minimum is usually 25% of the property value);
  • Age of the applicant;
  • Credit score;
  • Employment type; 
  • Income.

What documents does a first-time buyer of a buy-to-let mortgage need?

As you have no previous history of any kind of mortgage lending, you could be viewed as a bigger risk. This means you will need to provide more documentation upfront. 

This could include: 

  • A reference from your current landlord if you rent;
  • Several wage slips;
  • Up to six months of bank statements; 
  • More than 3 years of address history.

Lenders also require evidence that the predicted monthly rental income will be a certain percentage higher than your mortgage payments. 

For standard buy-to-let mortgage applications, this is around 125%, but for first-time buyers, this could be around 145%.

What deposit do I need for a first time buy-to-let mortgage?

As with any other mortgage, the larger your deposit, the better chances you have of a lender accepting your application as a first time landlord. 

If you offer a 10% deposit, you will be able to find a lender willing to offer you a buy-to-let mortgage. However, terms can be strict with a high interest rate. 

A 20-25% deposit would put you in a better position, and it will give you the best chance of securing the mortgage you want. It will also reduce your risk profile, and help you to secure a lower mortgage too. 

What are the fees on buy-to-let mortgages?

Buy-to-let fees for first time buyers in the UK usually include:

  • Broker fees
  • Lender application fees
  • Mortgage product fees
  • Valuation fees

The price of these fees may vary due to you being a first time buyer, as well as any potential complexity issues that may arise. 

Do first time buyers have to pay stamp duty on a buy-to-let mortgage?

Unfortunately yes, there is no way of avoiding stamp duty, which is essentially a tax paid to the Government on the price of the property. 

There is a discount for first time buyers, but you will not receive this if you are buying with the purpose of letting. 

If you’re buying your first buy-to-let property, you will not have to pay the additional 3% required from buyers who already own buy-to-let properties. 

Our expert team can provide further information and advice in this area.

FAQs about buy-to-let mortgages for first-time buyers

Can I get a buy-to-let mortgage and live in the property myself?

It’s highly likely that if you live in your buy-to-let property, that you will be breaching your mortgage conditions. A buy-to-let property is intended for paying tenants. 

If your circumstances change and you need to live in a property you have bought using a buy-to-let mortgage, you should contact your lender to discuss your options. 

Can I change a residential mortgage to a buy-to-let mortgage?

Yes, you may be able to remortgage your residential mortgage to a buy-to-let, but his can depend on various factors, including: 

  • What your property type is and the likelihood of it being rented out
  • What your personal circumstances are, such as credit score
  • The terms and conditions of your original mortgage agreement

Can I use a guarantor for a first time buy-to-let mortgage?

Yes, you can use a guarantor if you need assistance for a buy-to-let mortgage. As a guarantor agrees to meet any payments that the borrower may miss, some mortgage lenders may be willing to offer lower deposit terms because they feel the risk is reduced. 

Guarantors are required to feature on the title deeds, but they will not own a share of your property. 

Can you use the Help to Buy scheme for a first-time buyer buy-to-let mortgage?

Unfortunately no, you can’t use the help-to-buy scheme to purchase a buy-to-let property. If you’re looking for a way to keep your mortgage costs down, speak to one of our expert team members today. We will be able to assess your circumstances and provide any relevant resources and advice.

About the author 

Gary Oxborough

Gary is the Founder and Director of Barlow Irvin Financial Services Ltd. He has been in the Finance industry for over 20 years and has specialised in Mortgages since 2003. As well as running the firm, he is still actively involved in advising clients.

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