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Best Buy to Let Mortgages: 75% LTV

What is the best way to find a competitive buy to let mortgage with a 25% deposit? Guidance from the buy to let brokers on the best buy to let mortgages at 75% Loan to Value.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2024-06-15
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Is a 75% LTV Mortgage The Best BTL Option?

As experienced, independent specialists in buy to let mortgages, mortgage brokers often consults with property investment clients looking for exceptional deals on portfolio lending or the most competitive LTV buy to let mortgages.

If you'd like to check out the best 75% buy to let mortgage products on the market or compare remortgaging rates to refinance your portfolio, get in touch!

Finding the Best Buy to Let Mortgage: 75% LTV

Investment mortgages and buy to let mortgages are doubtless one of the most affordable ways to purchase a rental property.

Buy to let mortgage 75% LTV deals are almost always on an interest-only basis. They are a different product from residential mortgages, with refinancing often required if you're looking to change the use of an existing property asset.

One of the most popular scenarios is to compare mortgage products on interest only BTL loans, with a 25% deposit and 75% Loan to Value.

To get started with securing competitive buy to let mortgage 75% LTV offers, contact Revolution Brokers via the Contact Form above, or give us a call on 0330 304 3040.

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Eligibility Markers for Buy to Let Mortgages 75% LTV

Have you been turned down for a 75% buy to let mortgage LTV and don't know why? Here are some of the criteria your typical lender will assess when deciding what LTV rate they can offer:

  • Anticipated rental income.
  • Annual earnings thresholds.
  • Credit scoring or history.
  • Stress testing interest rates.

If you haven't been offered any great buy to let mortgage deals 75% LTV rated, likely, your application hasn't met one of the above assessments.

This is where Revolution comes in, as a whole-of-market broker with the skill and experience to recommend specialist lenders and work with property investors to ensure they get the buy to let mortgage 75% LTV they're looking for.

How Your Tax Bracket Impacts Your 75% Buy to Let Mortgage Offers

UK landlords who trade as a private individual, or sole trader, will need to disclose their income tax bracket as part of a mortgage application.

Buy to let mortgage 75% LTV lenders use that information to calculate the minimum rent your prospective investment property needs to achieve - an interest cover ratio.

Here's how it works:

  • If you are a basic rate taxpayer, most lenders will want to see rental income at 125% of your mortgage's monthly interest cost. So, if your interest charge is, say, £800 a month, the projected rental income needs to be £1,000.
  • Higher rate taxpayers need to achieve a 145% uplift between their mortgage payments and rental income. The same £800 a month interest-only mortgage would need to be for a property commanding £1,160 a month in rent.
  • Top rate taxpayers have a steeper challenge and typically need to demonstrate rent at up to 160% of the interest cost - so a mortgage at £800 a month requires an interest cover ratio amounting to £1,280.

On top of that, 75% buy to let mortgage lenders will use a nominal interest rate to calculate that monthly interest charge. So the mortgage cost used in stress testing might be substantially higher than the actual rates being offered!

Most lenders will use a 5% or 5.5% interest rate to work out the 'worst-case scenario' monthly cost and then apply the requisite cover ratio to see whether the rental income is sufficient.

Therefore, higher rate borrowers can find that their lucrative investment opportunity doesn't qualify for one of the best 75% buy to let mortgages, purely because the stress test uses a higher ratio.

Getting Great Buy to Let Mortgage Deals 75% LTV as a Higher Rate Borrower

The excellent news is that the Revolution team can recommend several solutions if you've found that you don't qualify for a lower 75% buy to let mortgage due to stress testing criteria.

One option is to look for a lender who stress tests your mortgage affordability based on your pay rate (more on that next!) or to use top-slicing.

Top-slicing means topping up the rental income with other revenue streams to demonstrate that you can comfortably afford the interest payments.

In effect, you get easier access to the best 75% LTV buy to let mortgages, adding your income to supplement the rental returns to meet the interest cover ratio requirements.

There are usually a few policies around top-slicing:

  • You may need to meet the 125% affordability assessment and then use top-slicing to supplement the income required as a higher rate taxpayer.
  • Many lenders will want to see a minimum income threshold, which could be anything from £10,000 (in addition to rental earnings) up to £40,000.
  • Achieving buy to let mortgage eligibility in this way isn't usually possible for later life borrowers or landlords reaching an upper age limit by the end of the term.

Not all lenders will accept this, so it's vital to work with a skilled broker with in-depth knowledge of the BTL lending market and the lenders with 75% LTV buy to let mortgages who will use top-slicing to demonstrate affordability.

The Benefits of Buy to Let Mortgage Rates – 75% LTV 5-Year Fixed Term

Fixed-rate buy to let mortgages, interest-only 75% LTV products are often some of the best options for investment landlords.

The five-year fixed term is optimal. It provides a good balance between the rates available on shorter-terms and more extended periods where lenders have less certainty about interest rate fluctuations.

Another benefit to opting for 75% LTV buy to let mortgages is that you can usually borrow a larger value. Shorter two or three-year fixed term buy to let mortgages are available, but given the lower period, the stress testing process tends to be more rigorous.

Therefore, if you're finding it tough to be offered one of the top buy to let mortgages 75% LTV based, it might be as simple as extending the fixed term to secure the borrowing you need with a 25% deposit.

How Income Impacts Your Application for a Buy to Let Mortgage, Interest-Only, 75% LTV

Pay rate lending isn't something many property investors know about, so it's well worth exploring the options - give the Revolution team a call if this is something you'd be interested in looking at more closely.

Buy to let mortgage UK 75% LTV products assessed against pay rates are an excellent option for applicants who have been offered a lower LTV and find themselves unable to proceed with a new property purchase.

Examples might include:

  • Needing a 75% buy to let mortgage LTV against a high-value property without significant enough rental value to meet affordability stress tests.
  • Investing in low rental yield properties that positively impact your portfolio coverage or diversification in an in-demand area.
  • Purchasing a rental property where current rental income is relatively low, but where the property, or the rental charges, are expected to appreciate considerably in the future.

Any of these scenarios would be potentially lucrative for a property investor, but using the stress testing process as described would almost certainly mean needing a much higher deposit or qualifying for non-competitive rates on buy to let mortgages 75% LTV rated.

Revolution Brokers will always take a holistic view to assess your circumstances and suitability for a buy to let mortgage UK 75% LTV. We aim to understand the purpose of your investment decisions - whether or not it fits into the typical stress testing framework.

Suppose you have a good credit history and decent security in place; a pay rate based buy to let mortgage may be an attractive option to secure a buy to let mortgage 75% LTV. You can usually borrow around 20% more in this way and achieve maximum LTVs on rental mortgage products, which wouldn't be possible otherwise.

To explore any of these alternative borrowing options or compare the best buy to let mortgages 75% LTV based, get in touch with the team.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature.

We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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