First-Time Buyer Buy to Let Guide – How to Get a Landlord Mortgage
When you hear the term “first-time buyer,” your mind probably jumps to someone purchasing a home to live in.
But not every first-time buyer wants to buy their forever home straight away. For some, stepping onto the property ladder means investing in a buy to let property.
If you’re considering becoming a landlord before becoming an owner-occupier, it can be possible.
Whether you’re looking to generate additional income, invest in an area where property prices are more affordable, or build a property portfolio, for the right people, buy to let can be an effective route into property ownership.
Can you get a buy to let mortgage as a first-time buyer?
Yes, you can but it’s not as straightforward as it is for someone who already owns a property. Many lenders see first-time buyer landlords as higher risk.
This is partly because you don’t have a history of mortgage repayments or property management, which makes it harder to predict how you’ll handle the responsibility of being a landlord.
Some lenders won’t offer buy to let mortgages to first-time buyers at all, but others will, provided you meet their criteria.
At Kerr & Watson, we work with a broad panel of lenders and can help you identify those that are open to supporting first-time landlords.
Why would you choose buy to let as your first property?
There are plenty of reasons why you might decide to rent out a property before buying one to live in yourself:
- You may not be able to afford to buy where you live, but you can afford a property in a different area with good rental yields.
- You could be living with family or renting somewhere convenient while investing elsewhere for the long term.
- Rental income can help build savings or support your future purchase of a residential home.
It’s an unconventional approach, but with the right advice for the right investors, it can be a wise long-term financial decision.
Find out Your Options
What criteria do lenders look at?
Buy to let mortgages come with stricter requirements than standard residential mortgages. As a first-time buyer, here’s what lenders typically want to see:
Deposit
Most lenders require a minimum deposit of 20 to 25 percent for buy to let properties. In some cases, especially for first-time buyers, you might need to put down as much as 40 percent. The larger the deposit, the better your chances of approval and securing a favourable rate.
Rental income
Your anticipated rental income must usually cover at least 125 percent of your mortgage repayments, and some lenders expect up to 145 percent. Lenders require evidence a surveyor to verify this.
Personal income
Many lenders expect you to earn at least £25,000 a year in addition to your rental income. This helps reassure them that you can manage the mortgage if there’s a rental gap or unexpected costs. Some lenders even have rules for first time buyers where the mortgage must meet affordability on a residential mortgage for them to agree a buy to let one (to reduce the chances of scheme abuse taking place).
Age and credit history
Buy to let applicants typically need to be over 21, with some lenders capping the maximum age at the end of the mortgage term around 70 or 75. You may also need a solid credit score and no recent issues with debt or missed payments.
If your situation doesn’t meet all of these requirements, there may still be options. At Kerr & Watson, we can explore options like guarantors, joint applications, or specialist lenders, to look for a solution.
The pros and cons of buy to let as a first-time buyer
Advantages
- Rental income: A well-chosen property can provide a steady income stream.
- Property growth: Over time, your investment may increase in value, helping you build equity.
- Step onto the property ladder: Even if you’re not ready to buy a home to live in, this lets you make your first property investment.
- Tax planning potential: If you purchase through a limited company, there may be tax efficiencies.
Disadvantages
- Larger deposits and higher rates: Buy to let mortgages are typically more expensive than residential ones.
- Landlord responsibilities: Managing tenants, property maintenance, and compliance with legal regulations can be time-consuming.
- Stamp duty: You won’t benefit from first-time buyer relief if you’re buying a property to let, though you also won’t pay the surcharge for additional properties, unless you later buy a home to live in. Stamp duty rules change so speak with a property solicitor for full guidance. You can utilise our Buy to let Stamp duty calculator for an indiciative idea.
- No access to government schemes: You can’t use schemes like Help to Buy or a Lifetime ISA if you’re buying a rental property.
As with any financial decision, it’s important to weigh the pros and cons carefully.
What documents will you need?
Applying for a buy to let mortgage as a first-time buyer means preparing paperwork. You’ll typically need to provide:
- Proof of identity (passport or driving licence)
- Recent payslips or self-assessment tax returns
- Proof of deposit
- Bank statements
- Credit report
Should you choose interest-only or repayment?
Most buy to let mortgages are interest-only, which keeps monthly payments lower and allows you to maximise profit.
However, you won’t be reducing your loan balance, so you’ll need a clear plan to repay the capital, typically by selling the property at the end of the mortgage term.
Repayment mortgages are less common but offer peace of mind that the debt is reducing over time. The disadvantage of these are the increased monthly cost which may remove your cash flow.
Your decision will depend on your investment goals, risk tolerance, and income. We can walk you through the pros and cons of each to help you make the right choice.
What other costs should you plan for?
Beyond the deposit and mortgage repayments, there are several additional costs to be aware of:
- Stamp duty Costs: You’ll pay the standard rate for investment properties, without the first-time buyer relief. Talk to a property solicitor for the exact amount based on your situation.
- Letting agent fees: If you’re not managing the property yourself, fees for tenant finding and property management can range from 5 to 15 percent depending on the agent.
- Legal fees: Conveyancing and landlord checks add to your upfront costs.
- Maintenance and safety: From energy certificates to boiler servicing, you’ll need to keep the property in good condition.
- Insurance: Specialist landlord insurance is usually required by mortgage lenders.
Planning ahead for these costs will help ensure your investment remains profitable.
Can you live in your buy to let property?
No, if you’ve taken out a buy to let mortgage, you’re not allowed to live in the property. Doing so would breach your mortgage terms and could result in the loan being recalled. If your circumstances change and you want to move in, you’d need to remortgage to a residential product.
If your goal is to eventually live in the property, it’s better to be open and get the right type of mortgage from the start.
What about buying through a limited company?
Some first-time buyers choose to invest through a limited company, particularly if they are higher-rate taxpayers.
While this can offer tax advantages, it comes with stricter lending criteria, fewer lender options, and often requires a personal guarantee.
This is a more complex route, but one that might suit your long-term plans.
We’ll look at your overall financial position and help you decide whether personal or company ownership makes the most sense.
Conclusion
Becoming a buy to let first-time buyer isn’t the usual route into property, but it’s becoming an increasingly popular one.
With careful planning, expert advice, and the right property, it can be a smart investment for some, that helps you build a strong financial future.
Whether you’re looking for your first property to rent out or weighing up your mortgage options, we’re here to help.
At Kerr & Watson, we take the time to understand your goals, search the market for the most suitable products, and give you clear, honest guidance every step of the way.
