Buy to Let Mortgages for the Self-Employed

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Buy to Let Mortgages for Self-Employed  

What are the features of a Buy to Let mortgage?

The overwhelming majority of Buy to Let mortgage products will be Interest-only, meaning that you will have to consider how you will repay the entire loan as a lump sum, at the end of the mortgage term. 

It’s also important to consider that your Buy to Let mortgage will not be regulated by the Financial Conduct Authority (FCA) unless it’s for the express purpose of buying a property to rent to close family members. You will also not be allowed to live in the property yourself whilst a Buy to Let mortgage is in place, even during renovations.

The criteria for Buy to Let mortgages is more substantial than for a Standard Residential mortgage, some but not all lenders will have the following requirements:

  • own your own residential home
  • repay the loan before the age of seventy
  • minimum personal income requirement of £25,000
  • a 20-25% minimum deposit requirement
  • strong credit score
  • preferance that you have prior landlord experience

What Things Should You Consider when Buying to Let if you are Self Employed?

There are very few differences in the application process for you as a Self-Employed applicant, other than how you will prove your income. The good news is there’s actually less focus on your income with a Buy to Let mortgage, as the loan is based on the potential rental yield (rental income) of your purchased property.

You may undergo a stress test, whereby the lender seeks assurance that you can afford the repayments on the mortgage in income-free periods, however this is not exclusive to Self-Employed applicants, you’ll just need to provide proof of income covering a longer duration.

Buy to Let mortgage considerations that apply to all applicants are:

  • Whether your chosen property can achieve 125-145% of the mortgage repayments in rental income
  • How you could potentially maximise your income potential, such as with a HMO (house of multiple occupancy)
  • The benefits of a landlord protection policy

Buy to Let as an Individual or through a Limited Company?

You can choose to take out a Buy to Let mortgage as an individual or through a limited company, however, which option is most beneficial to you will depend on your individual circumstances and tax status. We highly recommend seeking professional tax advice in this area.

What is a SPV?

An SPV (Special Purpose Vehicle) is a Limited Liability company that is set up for the sole purpose of buying investment properties. 

Speak To An Expert

We’re able to tap into our local knowledge to guide you through your house purchase in your chosen area.

What is Top Slicing?

Some Mortgage Lenders allow Self-Employed applicants to borrow the 25% deposit requirement on a Buy to Let mortgage from their own company, which is known as Top Slicing.

Top Slicing comes with potential tax liabilities, both personally and from a business perspective, so it’s important to seek professional tax and financial advice.

How Will Your Income be Assessed if You Are Self-Employed and Purchasing BTL Properties?

As mentioned above, the loan is based on the rental yield of the property, so your income will be assessed to ensure you meet any minimum income requirements of the lender and/or that you can afford the mortgage payments without rental income, known as a stress test.

In order to prove your income, the exact requirements will depend on the type of Self-Employed work you carry out, but usually include:

  • Two to three years accounts
  • SA302 self assessment tax returns / HMRC tax overviews
  • Business bank statements

What are the Tax Benefits/Implications?

The only tax benefits applicable to a Buy to Let mortgage are for basic-rate taxpayers, who can write off the costs of property management, repairs etc against their tax return. The implications are for all, and include:

  • Income tax on rental income
  • Capital gains tax on the sale of the property
  • Income tax on any profits of property sale
  • An extra 3% Stamp Duty on the purchase of all properties additionally to your residential home, valued at over £40,000

How can a Mortgage Broker Help?

Our Mortgage Brokers here at The Mortgage Centre specialise in helping Self-Employed applicants with all of their mortgage needs, including Buy to Let. We can ensure that you achieve your maximum income potential by finding the lender that is able to offer the most competitive deal for your circumstances. 

Whether you’re an experienced landlord or are looking to buy your first investment property, we can help you to prepare for your application, minimising your time and effort and reducing the administrative burden for you, as a busy business owner.


The Financial Conduct Authority does not regulate most Buy to Let Mortgages

Why Choose Us?

Why Choose Us?


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