Top Buy-to-Let Mortgage Rates for April 2025

Investing in buy-to-let mortgages is a common financing choice for those looking to purchase real estate with the purpose of leasing it out.

Typically, you'll require a down payment of at least 25% to secure such a mortgage, and the interest rates may also be higher compared to those offered for residential home loans for individuals buying their primary residence.

Most buy-to-let mortgages are interest-only , meaning your repayments will just cover the loan interest rather than the capital you’ve borrowed on the property. However, repayment mortgages are available.

Lenders determine how much you can borrow according to the income you expect to earn from leasing the property; as such, certain mortgage agreements require a minimum rental income in relation to the interest payments you will be responsible for.

If you're planning to purchase or refinance your primary residence, consider these steps: best residential mortgage rates .

In this section, Telegraph Money elucidates the functioning of buy-to-let mortgages and identifies those with the most competitive rates. The following guide will address:

What methods do we use to identify the top rates?
The best interest-only mortgages
The best repayment mortgages
Expert opinion: Five things to consider when choosing a buy-to-let mortgage
Buy-to-let mortgage FAQs

What methods do we use to identify the top rates?

The Best Buy tables show the best buy-to-let mortgage rates widely available in the market. This means certain accounts are excluded, including those that are available only to local or existing customers, properties with high energy ratings or clients of specific brokers.

The data is provided by mortgage lenders and verified by Koodoo, the trading name of Mortgage Power Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 845978) on a non-advised basis. The tables update daily between Tuesday and Saturday.

The rates shown correspond to a loan amount of £150,000 based on a property valuation of £275,000 over a period of 25 years. Use Koodoo’s comparison tool to find out if this suits you better. There are more advantageous offers suitable for your situation. .

This article provides informational content only and does not serve as an endorsement or advisory guide. If you fail to make timely payments on your mortgage, your property could be subject to repossession.

The best interest-only mortgages

A lot of landlords increase their rental income by opting for interest-only mortgages, as this type of mortgage keeps the monthly payments smaller since they cover just the interest on the borrowed amount. Usually, the full loan is settled when the property gets sold.

The top two-year fixed-rate interest-only mortgage options

The top five-year fixed-rate interest-only mortgage options

The best variable-rate interest-only mortgages

The best repayment buy-to-let mortgages

A repayment mortgage could benefit landlords looking to enhance their loan-to-value ratio for more favorable terms or prevent ending up in negative equity, which occurs when the home’s worth drops beneath the outstanding mortgage amount. Typically, monthly installments for such arrangements are greater compared to those of an interest-only mortgage since they cover both the principal debt and the accrued interest.

The top two-year fixed-rate repayment mortgage options

The top five-year fixed-rate repayment mortgage options

The top adjustable-rate mortgage options

Specialist view: Top five factors to ponder upon when selecting a buy-to-let mortgage

1. Deciding whether to go with a fixed or variable rate option

If you value short-term stability and a fixed monthly repayment, a two-year fixed-rate mortgage might be a good choice. A five-year fixed-rate deal can give you peace for mind for the longer-term, safe in the knowledge that you’ll be protected from market volatility.

You may prefer a variable-rate mortgage if you don’t want to commit to a fix – perhaps you’re planning to sell soon, or you’re betting on rates becoming cheaper in the near term. You’ll need to be comfortable with the fact that your repayments could change frequently.

Nicholas Mendes, of mortgage broker John Charcol, said: “A fixed-rate mortgage locks in your interest rate for a set period– usually two, five, or 10 years – providing stability and making it easier to manage your rental income.

“In contrast, a variable-rate mortgage, such as a tracker or discounted rate, moves in line with the Bank of England Bank Rate or the lender’s own rate, meaning payments can fluctuate. Borrowers should carefully consider their risk tolerance when choosing between the two.

A tracker mortgage could lead to savings when interest rates decrease, whereas a fixed-rate agreement guarantees consistency. Opting for a short-term fix offers adaptability if rates are anticipated to decline, while choosing a long-term fix delivers protection from possible hikes.

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How to decide between a fixed-rate or tracker mortgage

2. What size of deposit is required?

"Typically, buy-to-let mortgages demand a bigger initial payment compared to home loans for personal use, usually around 25% or even higher of the property’s worth. This upfront amount largely depends on the expected rent return. Generally speaking, the greater your initial investment, the more favorable loan terms you might secure," explained Adrian Anderson from the brokerage firm Anderson Harris.

3. Interest-only versus repayment

Mr. Mendes stated, "The majority of buy-to-let mortgages operate on an interest-only basis, allowing monthly payments to remain low by covering just the interest accrued. This approach helps increase rental income. Nevertheless, since the principal sum remains unpaid upon completion of the mortgage period, having a solid plan for repayment—like reselling the asset or refinancing—is essential."

“With a repayment mortgage, you progressively pay down both the interest and principal amounts, achieving complete ownership at the conclusion of the loan period—though this comes with increased monthly payments that could diminish your net rental earnings. The decision between these options hinges on your fiscal approach and the duration for which you intend to own the property.”

4. Tax implications

There are three main taxes which landlords may be liable for:

Stamp duty : There is a minimum 5pc stamp duty land tax surcharge if your buy-to-let purchase results in you owning more than one property. The tax payable is 10pc on a property’s value between £250,000 and £925,000, rising to 15pc on the value up to £1.5m and 17pc over this threshold. The stamp duty bill for a £275,000 buy-to-let property would be £17,500.
Income tax : Rental income is taxable, payable at your 20pc, 40pc or 45pc tax rate. You can deduct certain expenses, such as landlord insurance or energy bills, or make use of the £1,000 tax-free property income allowance. Mortgage interest relief is no longer fully deductible and is limited to a 20pc tax credit.
Capital gains tax : If you sell a property that is not your home for a profit, capital gains tax is likely to apply above a £3,000 annual exemption. This is charged at 18pc for basic-rate taxpayers and 24pc for those who earn more than £50,270.

5. Hidden costs

Mr. Mendes cautions purchasers about additional expenses to consider.

Purchase-for-rent mortgage agreements include several fees such as setup charges, appraisal expenses, legal costs, and penalties for repaying early. Numerous providers levy an arrangement fee—this might either be a fixed sum or a proportion of the total loan amount, potentially increasing your overall expenditure by thousands.

Furthermore, landlords have to account for landlord insurance, upkeep, property management fees, lettings agency charges, and possible vacancy periods when there's no tenant occupying the space. The critical factor in maintaining a successful buy-to-let investment is making sure that the rental income exceeds all these expenditures.

Buy-to-let mortgage FAQs

Is the interest rate for buy-to-let mortgages increasing?

The response to this might evolve rapidly; however, as of now – no, the rates are typically declining, though somewhat gradually.

Over the last few years, mortgage rates have experienced significant fluctuations, though they've settled slightly compared to before. However, these rates still haven’t reached the lower levels that potential borrowers were anticipating. Financial markets anticipate more decreases in the Bank Rate; nonetheless, positive developments can be seen—buy-to-let mortgage rates currently stand at their lowest point since September 2022, reports the consumer website Which?.

Mr. Anderson stated: "While the interest rate isn't everything, make sure you don't only focus on the main rate. Instead, determine the total expense of the mortgage by factoring in setup charges and additional concealed expenses."

Is a buy-to-let mortgage necessary for me?

Certainly, if your intention is to rent out a property that isn't fully owned by you, you would typically require a buy-to-let mortgage.

If you’re an accidental landlord – for instance, if you’ve inherited a property or moved in with a partner, and want to rent out a property that you bought with a residential mortgage, then you need to tell your lender. In some instances, they won’t make you switch and may charge you a small “consent to let” fee.

Buy-to-let properties pose greater risks for lenders, so if your bank doesn’t know that you’re a landlord, you may invalidate your mortgage terms.

Are buy-to-let mortgages more expensive?

Indeed, buy-to-let mortgages usually come with higher costs compared to standard home loans for owner-occupiers, making it crucial to determine if you can manage the pricing.

Mr. Anderson stated, "Lenders generally expect your rental income to cover between 125% to 145% of the mortgage payments when stress-tested at an increased interest rate. The criteria for buy-to-let mortgage affordability have become more stringent compared to previous standards."

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