To buy a rental property, you’ll typically need:

• 25% deposit of the purchase price
• 75% mortgage from a buy-to-let lender

So for a £200,000 property:

• Deposit = £50,000
• Mortgage = £150,000

You can raise the deposit from:

• Savings
• Remortgaging your own home to release equity
• Inheritance or gifts from family
• Joint venture partnerships

🧾 Can I Afford It?

• Residential mortgages are based on your personal income
• Buy-to-let mortgages are based mainly on the rental income the property is expected to generate
• Lenders usually require the rent to cover at least 125–145% of the mortgage payments, at a “stress-tested” rate (often 5.5–6%). 

Rental Stress Test Requirements:

Lenders typically require your rental income to cover 125% to 145% of the monthly mortgage payment, using a stress-tested interest rate (in this case, 5.5%).

• Minimum required rental income (125%):
  £687.50 × 1.25 = £859.38/month

• Stricter requirement (145%):
  £687.50 × 1.45 = £997.88/month

To pass the Buy-to-Let mortgage affordability test, your property’s monthly rental income should be at least between £859.38 and £997.88.

If the actual rent falls below this range, the lender may reduce the loan amount, require a higher deposit, or reject the application.

🔒 Fixed or Variable Rate Mortgage?

You’ll choose between:

• Fixed Rate – The interest rate stays the same for 2, 5, or 10 years
• Variable Rate – Follows the Bank of England base rate (currently 4.5%)

🔑 Tip: Most investors prefer a fixed-rate mortgage for predictable monthly payments and easier budgeting.

📌 How long do you need to repay a buy-to-let mortgage? How much is the monthly payment?

• Property purchase price: £200,000
• 25% deposit: £50,000
• Loan amount (mortgage): £200,000 – £50,000 = £150,000
• Interest rate: 5.5% (fixed for the first 5 years)
• Loan term: 25 years (interest-only for the first 5 years)
• Repayment method: Interest-Only Mortgage — Monthly payment of £687.50 (only interest during the first 5 years)

This amount only covers the interest and does not include any repayment of the principal.

🏦 Why Interest-Only Mortgage Works for Investors

Buy-to-let investors often use interest-only mortgages, where:

• You only pay interest monthly (not the loan itself)
• Monthly payments are much lower
• After years of property growth, you can refinance or sell to repay the loan

💡 Example:
Buy at £200,000 → In 20 years, it may be worth £400,000
You sell or refinance and keep the profit!

📉 What Upfront Costs Should I Expect?

1. Stamp Duty Land Tax (SDLT)
   • From April 1, 2025, investors will pay a 5% surcharge on second homes

Stamp duty on second homes from April 1, 2025

1. Solicitor Fees – ~£1,000–£1,500 for legal work and searches
2. Mortgage Fees – Arrangement fees, valuation fees, sometimes added to your mortgage
3. Survey Fees – £400 to £1,000 depending on the type of survey
4. Refurbishment/Repairs – Always set aside money to refresh or improve the property

🔧 Ongoing Landlord Costs

• Mortgage interest 
• Insurance (buildings, contents, public liability)
• Maintenance and Repairs (boilers, plumbing, general wear)
• Letting Agent Fees (10–12% of rent)
• Legal Compliance Costs:
  • Gas Safety Certificate (yearly)
  • Electrical Installation Condition Report (every 5 years)
  • EPC (valid 10 years)

📈 How Do I Know If It’s a Good Investment?

Simple calculation:

Monthly Rent – Monthly Costs = Monthly Cashflow (Profit)

💡 If your rent is £1,000 and expenses total £800, your cashflow is £200/month profit.

You want positive cashflow, so the rent covers your costs and leaves you income.

🏠 What Type of Property Should I Start With?

Best for beginners:

• A single-let house or flat, rented to a family, couple, or individual

Advantages:

• Easy to manage
• Steady monthly rent
• Good resale potential
• Lower risk

Other strategies (for later):

• HMO (House in Multiple Occupation) – More tenants, more income, more rules
• Serviced Accommodation – Short-term lets like Airbnb (higher income, higher work)

📍 Where Should I Invest?

Stick to areas where you:

• Live or work and know the local market
• Understand where demand is high
• Can identify good vs. bad streets

Ask yourself:

• Is there strong rental demand?
• Will your ideal tenant want to live in this area?

Good transport, schools, shops, and job opportunities = higher rental demand.

🔍 Where to Find Properties?

• Estate agents
• Online platforms:
  • Rightmove
  • Zoopla
  • OnTheMarket
  • PrimeLocation

🔎 Set up alerts and check daily for new listings!

🔨 Should I Buy at Auction?

You can, but be cautious:

Pros:

• Properties may be cheaper
• Quick sales (28-day completion)

Cons:

• No guarantees – properties often have legal or structural issues
• Non-refundable deposit
• You need cash or fast finance
• Not suitable for beginners

📝 The Buying Process – Step-by-Step

1. Find a property

• Do your research
• View the property
• Check rental demand and potential cashflow

2. Make an offer

• You can offer below asking price
• Your offer may be accepted, rejected, or negotiated

3. Offer accepted → Start legal & financial steps

• Instruct a solicitor to start the conveyancing
• Instruct a mortgage broker to find you the best deal

4. Valuation & Mortgage Offer

• The lender sends a RICS surveyor to value the property and estimate the rental income
• If everything checks out, the mortgage offer is issued

5. Solicitor carries out searches

• Local council searches
• Environmental and drainage checks
• Title deeds and ownership history

6. Exchange contracts

• You pay the 10% deposit
• Now the deal is legally binding
• You cannot pull out

7. Completion

• Your solicitor draws down the mortgage funds from the lender
• You pay your remaining deposit and fees
• The property is officially yours!

🎉 Be a Happy Investor

You’re not just buying a house—you’re building a long-term income stream, gaining a growing asset, and securing your financial future.

Yes, there will be things to learn and challenges ahead—but property is a powerful wealth-building tool when done right.

👉 Keep learning
👉 Be patient
👉 Reinvest your profits
👉 Focus on cashflow and smart decisions

Welcome to your journey as a happy and successful property investor! 🏡📈