Buy to Let Mortgages for Self-Employed

Get in touch today to discuss the most suitable mortgage option for you.

Buying a Buy to Let mortgage is relatively straightforward, even for the Self-Employed. As long as you have a good deposit saved and your rental income will cover the monthly mortgage payments, getting a Buy to Let mortgage deal just takes a little research.

How does a Buy to Let Mortgage work?

Buy to Let mortgages work in the same way as residential mortgages – as a loan to buy a property that you repay on a monthly basis over many years. They often have higher interest rates than a residential loan, though, and you need a substantial deposit: around 25% is typical. 

Buy to Let mortgages come in the form of both capital repayment and interest-only products. Interest-only is slightly more popular among landlords, because the payments are significantly lower. That means you make more profit on your rent – but you will need to have robust plans in place to repay the loan in full at the end of the term. 

What do I need to consider for a Self-Employed Buy to Let Mortgage?

Generally, lenders are less interested in your personal income and more focused on how much rent you can generate from the rental property. Most lenders want the rent to equate to 125% of each monthly mortgage payment. 

Some mortgages do set minimum income requirements, however. The purpose is to reassure the lender that you can afford to pay the mortgage if your property has no tenants in place for a while. 

Not all lenders require proof of income.

Something to bear in mind is that many Buy to Let mortgage lenders will require you to already own your own home, however, if you are a first time buyer/first time landlord we can still help obtain a buy to let mortgage for you.

Is it best to Buy to Let as an individual or through a Limited Company?

You may be aware of a trend in recent years for landlords to set up Limited Companies to manage and buy rental property. The main reason for this is to reduce tax liabilities, especially if you are already a higher rate taxpayer. 

An individual in this bracket would pay income tax at 40% on the profits from the rent, while a limited company pays corporation tax at just 19%. 

There are many more factors to explore and consider before setting up a company, however, so do seek financial advice before making any decisions. 

What is a Special Purpose Vehicle (SPV)?

An SPV is a type of limited company that is designed specifically for Buy to Let. It means that you can buy a property as a business instead of as an individual. Many Buy to Let mortgage companies will only lend to SPVs and no other types of company, and SPVs can only receive income from rent. 

There are lots of things to explore before setting up a company of this kind. Bear in mind that you may have to pay higher mortgage fees and interest as a business. Also, it is best to decide on your approach before you buy the property, as changing your mind later can be costly.

How do lenders assess income for a Self-Employed Buy to Let (BTL) mortgage?

Some, but not all lenders will request proof of your income. For Self-Employed applicants, that usually involves supplying two years HMRC Tax Calculations and Tax Overviews.  

Mortgage lenders will also explore your financial records and check your credit score.  

What is Top Slicing?

Top Slicing is a way for lenders to help customers get a Buy to Let mortgage when their planned rental income doesn’t meet the lender’s Inters Coverage Ratio (typically between 125% and 145%).

What are the tax rules for Buy to Let?

The first £1,000 of any landlord’s Buy to Let income is non-taxable. If your profit totals £2,500 to £9,999 after expenses, or £10,000+ before expenses, you will need to pay tax via an annual self-assessment. 

Allowable expenses are the costs of letting your property, such as insurance, advertising, repairs and letting agent fees. 

Another taxable element to remember is that additional stamp duty applies to Buy to Let property. When you sell, the proceeds may be subject to Capital Gains Tax

How can a Mortgage Broker Help?

Entering the world of property letting can seem daunting, but the good news is that Mortgage Marketplace can make it easy. Not only will we explore Buy to Let options on your behalf across high street brands and specialist lenders, but we will also help you at every step of your journey to becoming a landlord.

Our Mortgage Advisors do all the research on your behalf, make recommendations that suit your specific situation and then help you with your Self-Employed mortgage application. 

We are authorised and regulated by the Financial Conduct Authority. Contact us today for an initial consultation, free of charge. 

Business Buy to Let mortgages are not regulated by The Financial Conduct Authority.

Frequently Asked Questions

Call us today on 0800 170 7474 to discuss your borrowing potential and eligiability.

We believe in being competitive and transparent on fees.

Your initial mortgage consultation is free. You won’t be asked to pay a fee until we have submitted an application on your behalf.

Our fees depend on the product – see the list below or speak to an advisor.
Residential Mortgage & Remortgage
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee of £595.00 payable on receipt of mortgage offer. Total fees payable – £990.00.

Buy-to Let Mortgages & Remortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee from £595 up to 0.50% of the mortgage offer. For example, loan amount £200,000, broker fee payable could be £1,000.00. Total fees payable £1,395.00. A minimum broker fee of £595.00 will be applied on all buy-to-let applications.

Equity Release Mortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee of £995.00 payable on completion of your mortgage. Total fees payable – £1,390.00.

Credit Repair Mortgages
Application fee of £395.00 payable on receipt of the lender’s decision in principle and our broker fee equal to 0.5% of the mortgage offer. For example, loan amount £200,000, broker fee payable could be £1,000.00. Total fees payable – £1,395.00. A minimum broker fee of £595.00 will be applied on credit repair applications.

Life Insurance
No fee will be charged by us. You will receive a free quotation from the policy provider.

Typically, the mortgage process will take 2-6 weeks to reach approval.

A mortgage offer is usually valid for 6 months.

Please be aware, the process is currently taking longer due to Covid-19. Please see question ‘How has Covid-19 affected the mortgage market?’.

Whilst you are not required to take out a life cover, our job is to ensure your mortgage is affordable, no matter what. It may not be nice to talk about, but if something were to happen to you, you want to know your family and investment are safe.

We will advise on all the options available and provide a no obligation quote from our partner provider, Royal London.

You may need a solicitor, depending on the circumstance. Your adviser will discuss this with you, and should you need one we can put you in touch with our trusted partners, or you can use you own.