Frequently asked mortgage questions

A buy to let mortgage is a loan secured on a residential property with the specific aim of letting it out to tenants.

Yes, you will need a buy to let mortgage in place to let out your property to tenants. If you let out your property on a residential mortgage without your lender’s consent, you may be in breach of your mortgage conditions. Get in touch with one of our expert brokers to discuss your options.

The loan to value (LTV) is how much you are borrowing as a percentage of the value of the property in question. Typically, landlords secure buy to let mortgage rates at 75% LTV.

Your gross rental income is the total amount your tenant pays before you subtract any expenses. Your net rental income is your true earnings after you’ve accounted for any fees, running costs, or taxes. To calculate the rental yield, divide your gross annual rental income by the property value, then multiply by 100.

The ‘ICR’ is part of a lender’s affordability assessment and is frequently referred to as part of a lender’s RTI (rent to interest) calculation.

RTI calculations for a five-year fixed rate are set at 145% at the ‘pay rate’ (the actual mortgage rate) for individual borrowers and 125% for Limited Companies. The reason it's lower for Limited Companies is because they generally pay a lower rate of tax. Therefore, lenders underwrite the application knowing you can afford more than if you were borrowing in your own name. Please seek professional tax advice before making any property investment decisions.

Lenders use these RTI checks to assess how affordable a mortgage product is for your current circumstances. It ensures the rental income comfortably covers the monthly mortgage payments and any additional associated costs.  

Buy to let mortgage lenders typically prefer borrowers to put down a 25% deposit. If you have a minimum deposit you can get BTL mortgages with a 15% deposit; however, there are fewer mortgage products available, and the interest rates are higher. Overall, rates are more competitive when you can put down a deposit of 25% or more. 

A residential mortgage is a loan secured on a property for you to live in, whereas a buy to let mortgage is a loan secured on a property you let out or rent to tenants Buy to let mortgages tend to incur higher fees, and mortgage interest rates are typically higher as well, as they are more specialist mortgage products. 

Furthermore, buy to let is not a regulated industry, whereas residential mortgages are. As such, you only have access to the Financial Services Ombudsman and Financial Services Compensation Scheme when applying for a mortgage for your own home. This is because buy to let mortgages are considered to be business transactions, and therefore are not eligible for the FCA’s consumer regulations.  

Arrangement fees are the amount a lender charges to set up the mortgage for you. You usually pay this once the mortgage application completes, although some lenders let you add it to the loan. However, remember that you'll pay interest on the fee if you add it to the loan. 

The product fee can be a percentage of the loan or a fixed amount. Some lenders may charge higher arrangement fees to bring down the interest rate. 

Whether a fixed or variable-rate mortgage is better for you will depend on your circumstances. Speak to our expert brokers to discuss your options.

Here are some of the benefits of using MFB to secure your buy to let mortgage: 

1. Full market choice

Working with a whole-of-market broker gives you access to all products available on the buy to let market. Your broker will review the whole market, find you the best options and give you expert advice.  At MFB, we've developed relationships with some of the biggest BTL lenders. This means we can access exclusive and limited-edition ranges you can't get anywhere else.

2. Dealing with experienced professionals 

To reduce the stress and time it takes to complete a mortgage application, working with our expert team at MFB is your best option. We'll make sure you have all the necessary supporting documentation for your application, and package it up. More support and less stress for you, and a higher chance of your lender accepting your application first-time! 

3. Mortgage market volatility 

The mortgage market is constantly changing. Lenders often change criteria and withdraw mortgage rates at short notice, making it difficult to keep up. Our brokers stay on top of the latest changes so they can always provide you with the most up-to-date advice. 

Lenders usually let us know about these changes ahead of time, giving our team time to reassess your application. We'll always try our hardest to secure you the best deal on the ideal loan amount for your property investment plans. 

4. Invaluable advice and support

It's our priority to secure you the best mortgage rate for your needs and provide a seamless mortgage application process. You can ask questions and discuss any concerns with your dedicated MFB broker. They'll highlight the pros and risks of your options to help you make the right financial decisions. We want to support your property investment plans and help you grow your portfolio, every step of the way.  

 At MFB, your broker remains your broker. So when you need us, there's someone here who knows you and your investment goals. 

Capital and interest repayments mean that each month, you repay part of the primary loan (the capital) and the interest charged by the lender. 

Interest-only repayments are when you only repay the interest charges every month. This means the capital loan does not decrease over time.  

Most landlords opt for interest-only buy to let mortgages, as it makes monthly repayments smaller, which can be better for cash flow. our lender needs to know how you will repay the capital loan at the end of the mortgage term when you apply. Typically, landlords sell the property or use proceeds from the sale of another to repay the capital at the end of the mortgage term. 

Lenders do offer capital and interest repayments for buy to let mortgages. Our experienced buy to let brokers can talk you through the options to help you decide the best repayment structure for you.  

We have access to all available mortgage lenders and deals on the intermediary market. Our reputation and experience mean that some lenders give us exclusive or semi-exclusive access to products. This means that we have access to mortgages you can't apply for without us. To be sure you're getting the best deal available, speak to our mortgage makers. 

Technically, there is no limit. However, lenders do have limitations on:  

• The amount of borrowing across your portfolio (either with them or with other lenders) 
• The number of mortgaged properties you have in the background (either with them or with other lenders) 
• The total loan to value (LTV) across your portfolio  

Essentially, the more mortgages you have, the greater the total debt you owe and, therefore, the higher your risk as a borrower. Our expert broker team know which lenders have which limits and what they are, so we can help you find the right lender. 

There are three main factors to consider when comparing buy to let mortgage rates, and the headline interest rate isn’t one of them! 

Criteria 

Lender criteria can vary significantly from provider to provider. While you may be a perfect applicant for one, another may not accept your circumstances at all. As such, working with one of our experienced brokers who has a thorough understanding of the buy to let market space can save you time and money, as they will only recommend lenders who they’re confident will accept your application and meet our standards of service. 

Costs 

The true cost of the mortgage is more than just the initial rate you source. You should always consider the arrangement and valuation fees, as well as the legal costs, alongside the interest rate pricing. We can help you compare the total cost of borrowing during the initial rate period of different mortgage products to ensure you secure the most competitive option. 

Hidden quirks 

Some products will have quirky additional terms, such as exit charges extending beyond the fixed rate period, which may catch you out once it’s too late. Ensure you carefully read over all the mortgage documents and speak to your broker to be confident in your mortgage application. 

Yes, there’s nothing stopping you from setting up a Limited Company today and purchasing a property through it tomorrow. As most lenders require a personal guarantee, they underwrite the applicants (the company’s directors and potentially its shareholders) behind the Limited Company as opposed to the company itself. Consequently, the mortgage is underwritten in the same way to an individual application. Read our blog on borrowing through newly set up Limited Companies here for more information. 

We have access to all available mortgage lenders and deals on the intermediary market. Our reputation and experience mean that some lenders give us exclusive or semi-exclusive access to products. This means that we have access to mortgages you can't apply for without us. To be sure you're getting the best deal available, speak to our mortgage makers. 

As a minimum, you’ll need a deposit of at least 5%. It’s worth bearing in mind that in most cases the larger the deposit you can put down, the more competitive the mortgage interest rate pricing. 

The answer to this will entirely depend on your individual circumstances. Lenders will want to review your income (or combined income if you’re purchasing with a partner or friend) to ensure that the mortgage is affordable for you. If you are a key worker you might even be able to access more competitive mortgage products from some specialist lenders.

As a general rule, lenders will offer around 4.5x the total applicant income, but our expert brokers may be able to help you access more. Visit our ‘how much can I borrow’ calculator for an estimate of what size loan you could access.

It can take between two to six weeks to get a mortgage offer , but this depends on how complex your mortgage application is and the recommended lenders service levels. After you’ve secured your mortgage offer, it takes on average a further 6 weeks to complete and draw down your loan. Once again, this will vary based on the number of properties in the chain and any complications during the conveyancing and legal process of the application.

There are a number of fees that you will need to pay when applying for your residential mortgage, and it’s important you factor these into your costs. 

The fees themselves will vary from lender to lender, but as a guide, you will need to pay: 

• Lender arrangement fee – this is what lenders will charge you to set up the mortgage. This can be a fixed amount or a percentage of the loan amount and will typically be due on completion. Most lenders will allow you to add this to the loan, although remember you will then be charged interest on this. 
•  Valuation fees – this fee covers the cost of a lender’s survey of your home. On many mortgage products, lenders will not charge a valuation fee as an incentive for borrowers, but generally cost around £250.  It's important to remember that this is a valuation for mortgage purposes and not a substitution for a more in-depth homebuyers or structural valuation report
•  Legal fees – these fees cover the costs of the conveyancing work on your mortgage, and will vary depending on your solicitor. If you don’t have a solicitor already, one of our expert residential brokers will be able to help you find one and make sure you understand what you’re paying for, as some may quote without the required legal searches included
• Stamp Duty Land Tax (SDLT) – if you’re purchasing a property, you may be liable to pay SDLT on purchases (or transfers of equity) over £250,000 or £425,000 for first-time buyers. Our SDLT calculator will help you work out how much you’ll need to pay. 

Each lender has their own SVR, which will track the Bank of England Base Rate or a similar financial rate such as LIBOR / SONIA. When you come to the end of your initial rate term, you will automatically revert onto your lender’s SVR if you haven’t had your broker arrange your remortgage for you in advance. 

Lenders SVR’s are typically much more expensive than other fixed and variable rates on the market. Lenders have complete control over their SVR pricing, meaning that shifts in money market activity don’t necessarily mean changes to your mortgage repayments.

Your financial circumstances, the complexity of your application, and your mortgage requirements will all impact whether it’s better for you to secure a mortgage with a Highstreet bank or a specialist lender. Or, it may just come down to which provider offers the most competitive mortgage deal for you. Our specialist brokers have whole-of-market access and will therefore review all your options to ensure you secure the best rate for your individual needs. 

Generally speaking, specialist lenders offer a more flexible approach to their lending and may be more willing to take a view on more complex applications. Specialist lenders will also have more bespoke criteria to support borrowers. Many specialist lenders are intermediary-only, meaning they don’t deal with borrowers directly. As a whole-of-market broker, our experts will recommend you the best specialist mortgage product deals to suit your needs.

Most lenders will allow you to make overpayments on your mortgage up to a maximum of 10% (there are a few which allow 20%) of your outstanding balance per annum. If you can afford to, it can be highly beneficial to overpay your mortgage, as you can reduce the overall term of your loan and the total amount of interest you pay. Our expert brokers can review your existing mortgage offer to confirm whether overpayments are permitted with your current mortgage deal.

Potentially. The most important thing to do when you’re considering letting out your home on a residential mortgage is to speak to one of our expert brokers who can check under what circumstance your lender may accept the request to let out your home. Some mortgage agreements won’t allow you to do this without the lender’s specific ‘consent to let’, and you could face significant consequences if you breach your mortgage conditions.

The Government are looking at new ways of helping people get onto the property ladder and often offer different schemes to help people buy their homes. 

Currently, they offer a shared ownership scheme which is UK wide, which allows you to buy a share of a home if you cannot afford the deposit or mortgage to buy it in full. You then pay both the mortgage on your share and rent to a landlord to cover the remainder. For more information on the shared ownership scheme, visit the Government website. 

Although the Help to Buy scheme is no longer available, you can still set up a Lifetime ISA to buy your first home or save for later life. You must be 18 or over, but under 40 to open a Lifetime ISA. To learn more about Lifetime ISAs, read the Government website here.  

Technically, yes, you can have more than one residential mortgage. However, lenders will be looking for substantial evidence that you use both properties as homes, rather than as property investments such as buy to lets or holiday homes. Lenders will also have strict criteria when you apply for an additional residential mortgage, as well as look to ensure you meet the required affordability assessments. Speak to our experts (as well as a tax advisor) if you’re looking to purchase a second home with a residential mortgage. 

Most mortgage offers are valid for three to six months, depending on the lender.

When purchasing or remortgaging a property for yourself or your family, it’s no small investment. The process deserves to be treated diligently and with the amount of time and consideration it needs,  

Applying for a mortgage can be complex and daunting, particularly with so many lenders and finance options out there to consider. Our mortgage brokers can help speed up this process for you and remove the stress and hassle of the application. They will also give you invaluable advice and support throughout the whole process, giving you the confidence you need, to get the results you want. 

Our residential mortgage brokers are award-winning experts in their field. They have the experience, expertise, and qualifications to support you with your home purchase, remortgage or first-time buyer needs. Their level of knowledge and understanding of the mortgage sector means you can be confident that we’ve recommended the right mortgage product for you. Our team of experts are helpful and friendly and want to source you the best mortgage deal possible. To discuss your home purchase or remortgage plans, get in touch with our residential brokers here.

Life insurance, or ‘Mortgage protection’, is not a legal requirement of your mortgage agreement. However, it is highly advisable to take out a life insurance policy to protect the people you live with from significant financial strain should you pass away. 

Similarly, Mortgage payment protection to ensure you can maintain your repayments in the event of being unable to work is also advisable. We can help you find a policy that suits your needs; just ask your dedicated MFB broker.

It’s important to be aware of the common factors that may slow down your purchase process. 

Conveyancing issues are the most frequent cause of mortgage purchase delays. These may come down to paperwork issues, complications with the property, environmental search results, or even a disagreement between a buyer and seller. To reduce the risk of this impacting your purchase, have all your documents completed and ensure your solicitor is not waiting on you for any forms. 

Survey results may also cause delays to your purchase process, particularly if structural issues are found in the property. It’s important to consider the costs of these issues and whether you’re happy to fix them yourself. You may decide to ask the seller for a discounted sale price depending on the scale of the issues. These negotiations, though necessary, can delay the process by days or potentially a couple of weeks. If you do require any additional specialist property reports such as subsidence or timber and damp, we can help you find the best companies to undertake these reports.

Finally, delays in the chain may slow down your process. Chains can be complex and long, and coordinating everyone to complete on the same day can be extremely difficult. Your dedicated relationship manager will stay in touch with your estate agent and solicitor and chase along the chain to progress things as fast as possible. 

Simply put, a remortgage is when you refinance your current mortgage to a new mortgage, typically with a new lender.

Usually, you complete a remortgage when your existing fixed-rate mortgage deal has ended. This is because, at the end of a fixed term, you’ll start paying your lender’s standard variable rate (SVR), which is nearly always more expensive than the interest rate you were paying or can secure with a new deal.

Other reasons you may want to remortgage are if your financial circumstances change or if you want to borrow more to pay for home improvements. 

You can remortgage with your existing lender (a product transfer) or with a new lender, depending on which offers you the best deal. Our experienced team of residential mortgage brokers can compare all the rates available to you and secure you the most suitable one.

Generally speaking, it takes between two to six weeks to get a mortgage offer, but this will depend on your lender and the complexity of your application. Once you’ve received your mortgage offer, the next stage of the process usually takes a further 4 to 6 weeks on average.

An ERC refers to the fee you’d need to pay your lender if you repay your mortgage agreement early during the initial period, or you exceed the agreed overpayment limits during this period.

For example, if you took a 3-year fixed mortgage, your lender may charge you a 3% fee of the amount outstanding if you repay the loan in the first year of the 3-year fixed-rate period, 2% until the end of year 2 and 1% until the end of year 3 from drawdown.

Conveyancing is the term often used to refer to the legal work completed by a conveyancer or solicitor when purchasing or selling property. It’s an essential part of the mortgage process. If you don’t already have a solicitor, we can help you find one. Ask your MFB broker for assistance. 

How much your mortgage will cost will depend on a number of factors, such as: 

• How much you borrow
• The total term of the mortgage 
• The interest rate charged
• Whether you add any fees to the loan
• The repayment method (Interest-Only or Repayment)

Your broker will compare the costs of different mortgage interest rates to make sure you’re choosing the most competitive deal. It’s important to remember that the best deal for you doesn’t necessarily mean the cheapest. You can calculate how much your monthly repayments will be with your new rate using our Mortgage Repayment Calculator. 

You can explore the current residential mortgage rates that may be available to you using our ‘Find my Mortgage’ calculator above. For a better idea of the rate you could access, speak to one of our expert brokers.

EPC assessors carry out the process of granting an EPC in England, Wales, and Northern Ireland, and by government-registered Domestic Energy Assessors in Scotland. The process involves surveying the property, after which the assessor will produce your Energy Performance Certificate. The energy report will include:

• Estimated energy costs for the property 
• A current energy efficiency rating from A to G, with A being the highest level of energy efficiency
• A potential EPC rating if the property is improved in key areas through energy efficiency improvements

Remember that existing dwellings will require a RdSAP EPC (Reduced data Standard Assessment Procedure), and a new dwelling will require a full Standard Assessment Procedure. Be sure to keep all documents that relate to the installation or upgrade of relevant energy efficiency projects for the home, as the process only accounts for measures that can be seen or proven.

For landlords, it is legally required to have a current EPC rated E or higher for any rental properties or to take in a new tenant. Your property also must meet minimum energy efficiency standards (MEES) for domestic lettings.

As a property buyer, this energy report is a valuable document that can help you forecast your energy bills, improve your energy rating, and plan improvements to reduce energy bills through energy-efficient measures. As green living trends continue to gain traction with potential buyers and renters, and those who want their money to go further, a high energy rating is a useful way to attract renters to your rental properties, show their potential savings on energy bills, and possibly help increase the value of the property when the time comes to sell.

Your property will be assigned Standard Assessment Procedure (SAP) points by the domestic energy assessor for each element of the assessment process, grading it for energy efficiency against a standardised energy-efficient rating system. 

When grading the home, the EPC assessor will look at many aspects of the property. These results shouldn’t be examined without context when considering an investment. For example, an old home that may be a very attractive rental or investment property will almost always have a lower rating than a new build. 

Typically, the assessor will look at the following in addition to the age of the building:

• Total floor space – Larger homes with higher volume rooms usually require more lighting and heating per square foot than smaller homes.
• Lighting – The percentage of energy-efficient lighting (LED) in the property.
• Windows – Single-glazed or poorly sealed windows will receive a lower rating than modern, sealed windows.
• Hot water heating – Heating systems that are fully insulated and modernised will receive a higher rating than old or non-insulated systems.
• Airtightness – The better the home is sealed against the elements, the more energy-efficient it will be to heat or cool. Weather tightness will include examining external doors and windows, attics and basement areas, pipe entry points, etc.

The final score will place your property within a band, grading it from A (most efficient) to G (least efficient). In the UK, the average home meets a D rating. It’s important to note that to rent out a buy to let property, the lowest EPC rating band your property can fall into is E.

EPC rating A

This is for properties that reach 92-100 SAP points. These homes have the highest energy efficiency and usually have exceptional insulation, modern energy-rated heating systems, passive home design elements, and high-efficiency green technology like solar panels, heat pumps, and smart energy-saving upgrades.

EPC rating B

These properties score between 81-91 SAP points, which is still very high. They may be older but recently upgraded properties where the owners have consciously invested in energy-efficient products and technologies or homes built recently.

EPC rating C

‘C’ rated properties score between 69-80 SAP points, a respectable rating above the UK average. These homes may be older and lacking in certain areas but have some key upgrades that promote energy efficiency, including insulation, weatherproofing, or solar panels. These homes are a good opportunity for investors to upgrade their EPC rating and the property’s value.

EPC rating D - least efficient

This is the average rating for residential buildings in the UK, scoring between 55-68 SAP points. These homes often have a lot of opportunities for improving the EPC rating and typically have elements such as old boiler/heating systems, unused/no secondary heating systems, poor air tightness, old/inefficient insulation, and single glazing. In these homes, simple and affordable upgrades can make a significant difference to the home’s comfort, renter appeal, and value.

One of the most valuable aspects of this energy report is that it shows estimated energy costs at the current level of energy efficiency and the potential savings if certain upgrades and energy-efficient measures are applied. This is divided into 3 key categories: 

• Lighting
• Heating
• Hot water 

The report projects savings over the next three years in line with the potential energy-efficient rating the domestic energy assessor believes the property can reasonably achieve.

This is especially useful for buy to let property investors, as it can help you better understand the returns you will get on energy efficiency upgrades. While these savings may be passed on to the renter in most cases, the lower lighting, heating, and hot water costs can make the property that much more appealing to renters, allowing you to increase your rental yield from rental properties, improve attractiveness to potential buyers, and maximise profit when selling the property.

EPCs are generally very affordable, but they will vary from provider to provider. You can expect to pay around £75-£120, especially if the assessment is through a real estate agent. Third-party providers can also assist you and vary the price according to the property size.

There are many ways to improve your property’s EPC rating, and many of them are affordable too. These projects don’t often impact the aesthetics of your property but will make it more comfortable and affordable to live in – and it improves the home’s value too. Here are some of the most effective ways to improve your EPC rating.

Wall insulation

Internal wall insulation in all the main cavities of a home will help improve your EPC rating. This can be a rapid and affordable process, carrying potential savings of around £160 per year. External wall insulation will also help make the home easier to warm, can improve the exterior look of the property, and protect the walls and foundation from moisture damage. Typically, this is best suited to homes built post-1920s and can improve your rating by 5-10 points.

Loft insulation

Because heat rises, a property can lose as much as 33% of its warmth through an uninsulated ceiling space. For maximising efficiency for your EPC rating, it’s recommended that you install loft insulation that is at least 270mm thick with a 100mm layer between the joists and a 170mm perpendicular top layer. This can improve your rating by 10-15 points.

Double glazing

Installing double-glazing will add several points to your EPC rating and is highly recommended if you have old single-glazing windows. However, it will not make too much of a difference if you have older double-glazed windows.

Boiler replacement

Upgrading to a high-efficiency condensing boiler is another good way to add up to 20 points to the property’s EPC rating. This will depend on how old and inefficient the current boiler is, keeping in mind that boilers should be replaced every 10-15 years. If the home has a hot water cylinder, you should insulate this tank to gain a few points affordably and save on water heating costs.

More efficient secondary heating

Secondary heating systems like fireplaces, space heaters, and fixed wall heaters are also considered in the EPC assessment. Upgrading to a more energy-efficient system (for example, a wood-burning stove rather than an open fireplace) can help gain additional points.

No. Since 2013, listed residential buildings have been exempt from EPCs. However, you must ensure that it meets minimum requirements for energy efficiency if you intend to sell or rent the property. 

The easiest way to make sure that your residential buildings are meeting these standards is through an EPC assessment. However, you can disregard any suggestions that can harm the authenticity of the building. You may also need permission to install certain upgrades, including renewable energy sources, a new high-efficiency boiler, or weatherproofing, and some upgrades like double-glazing or insulation may be denied.

EPC stands for Energy Performance Certificate.

As part of the EPC, you’ll also receive an Environmental Impact Rating (EIR) that determines the carbon footprint (carbon dioxide emissions or carbon emissions) of residential buildings. This is also banded from A to G, and, as with the EPC rating, the higher the EIR, the lower the carbon emissions and the lower the impact the property has on the environment. 

In addition to getting a current EIR, you will also get a potential EIR to show how you can upgrade your property to reduce carbon dioxide emissions if you want to do so.