Interest rates are one of the most important factors in any buy-to-let investment. Even small differences in rate can have a significant impact on your monthly cash flow and overall profitability. In this guide, we explain what to expect from buy-to-let mortgage rates, the different types available, and how to secure the best deal.
For a broader overview of the market, read our complete guide to buy-to-let mortgages.
Typical Buy-to-Let Mortgage Rates
Buy-to-let mortgage rates are generally higher than residential mortgage rates, reflecting the additional risk lenders associate with rental properties. Factors such as potential void periods, reliance on tenant payments, and the investment nature of the borrowing all contribute to this premium.
As a general guide, buy-to-let rates tend to sit around 0.5% to 1.5% above equivalent residential rates, depending on the product type, LTV, and lender. The most competitive rates are typically available at lower loan-to-value ratios, particularly 60% LTV and below, where lenders have the most security.
Even a 0.5% difference in your buy-to-let mortgage rate can add up to thousands of pounds over a five-year fixed term. On a £200,000 interest-only mortgage, that is roughly £1,000 per year.
Rates for limited company buy-to-let mortgages tend to be slightly higher still, typically adding a further 0.25% to 0.75% compared with personal buy-to-let rates at the same LTV. For many higher-rate taxpayers, however, the tax savings of a limited company structure more than offset this rate premium. See our guide to buying through a limited company for more detail.
Fixed Rate vs Tracker
Buy-to-let mortgages are available as fixed-rate, tracker, or variable-rate products. Each has its advantages and trade-offs:
Fixed Rate
- Your rate and monthly payment stay the same for the fixed period, typically two or five years
- Easier to budget and plan cash flow, particularly important for landlords managing multiple properties
- Protection against interest rate rises during the fixed period
- Usually comes with early repayment charges (ERCs) if you want to exit before the fixed period ends
- Five-year fixes often offer lower rates than two-year fixes and provide longer-term certainty
Tracker Rate
- Your rate tracks the Bank of England base rate by a set margin (e.g. base rate + 1.5%)
- If the base rate falls, your payments decrease automatically
- If the base rate rises, your payments increase, which could squeeze your rental profit margins
- Some tracker products have no early repayment charges, giving you more flexibility to switch or sell
- May offer a lower initial rate than a fixed-rate product
Many landlords opt for fixed rates to give them certainty over their costs, which makes it easier to calculate net rental income accurately. However, if you expect interest rates to fall or want the flexibility to exit without penalties, a tracker product may be more suitable.
What Affects Your Buy-to-Let Rate?
Several factors influence the rate you are offered on a buy-to-let mortgage:
- Loan-to-value (LTV) — the single biggest factor. A 60% LTV will attract a significantly lower rate than a 75% LTV. Read our deposit guide for more on how your deposit size affects rates.
- Product type — fixed rates, trackers, and variable rates are priced differently. Longer fixed periods may offer slightly different rates than shorter ones.
- Personal or limited company — limited company rates are typically higher than personal rates at equivalent LTVs
- Property type — standard residential properties attract the most competitive rates. HMOs, multi-unit freehold blocks, and non-standard construction properties may carry a rate premium
- Credit history — a clean credit record qualifies you for the widest range of products and best rates. Adverse credit will limit your options and typically result in a higher rate
- Portfolio size — portfolio landlords (four or more mortgaged properties) may find that some lenders charge a small premium or have different product ranges
- Lender fees — do not look at the rate in isolation. Some lenders offer lower rates but charge higher arrangement fees. The true cost of the mortgage should be assessed by looking at the total cost over the product period, including all fees
What is a stress test and how does it affect my rate?+
Do arrangement fees affect the true cost of my mortgage?+
How to Get the Best Rate
Securing the most competitive buy-to-let mortgage rate requires a combination of preparation and professional advice:
- Maximise your deposit — even moving from 75% to 70% LTV can unlock better rate tiers
- Maintain a clean credit file — check your credit report before applying and address any errors or outstanding issues
- Use a specialist broker — many of the best buy-to-let products are only available through intermediaries. A broker can search the whole market and identify deals you would not find on the high street
- Compare the total cost — a lower rate with a £2,000 arrangement fee may cost more over two years than a slightly higher rate with a £500 fee. Ask your broker to compare the total cost of the mortgage over the product period
- Consider product transfer — when your current deal expires, your existing lender may offer a competitive product transfer without the need for a full remortgage. However, always compare this with what is available across the wider market
Use our mortgage calculator to estimate your monthly payments at different rates, or complete our short online enquiry to be matched with a specialist buy-to-let broker.
- Buy-to-let rates are typically 0.5-1.5% higher than equivalent residential rates.
- The biggest factor affecting your rate is your loan-to-value ratio — aim for 60% LTV for the best deals.
- Five-year fixed rates often offer lower rates than two-year fixes and provide longer-term cost certainty.
- Always compare the total cost of a mortgage (rate plus fees) rather than the headline rate alone.
- Start looking for a new deal 3-6 months before your current product expires to avoid falling onto the SVR.