Buy-to-Let in a High-Interest Climate: Is It Still Worth It? | WIS Mortgages

Buy-to-Let in 2025: Challenges and Opportunities for First-Time Landlords

Introduction

For many aspiring property investors, a buy-to-let (BTL) mortgage is the first step toward building a portfolio and generating rental income. But with interest rates on the rise, first-time buy-to-let mortgage applicants may question whether the rewards still outweigh the risks. The UK rental market remains strong, but new landlords face tighter lending criteria, higher upfront costs, and stricter affordability checks. This blog explores the realities of securing a first time BTL mortgage in 2025 and whether it’s still a viable investment strategy for those new to property letting.

Buy-to-Let Basics in 2025

Understanding the Market Shift

Interest rate hikes have had a notable impact on mortgage affordability, particularly for new landlord mortgage UK applicants. Higher monthly repayments can squeeze rental margins, especially in areas where rents haven’t kept pace with inflation. However, strong tenant demand—particularly in urban and commuter locations—still presents income opportunities for savvy investors. Prospective landlords need to balance potential returns against increased borrowing costs.

First Time BTL Mortgage Requirements

Lenders typically impose more stringent criteria on inexperienced landlord mortgage applications. Most require a 20 – 25% deposit, with stress tests on rental income to ensure it exceeds 125 – 145% of mortgage repayments at a notional interest rate. Additionally, some lenders may insist on a minimum personal income, often around £25,000, to support the loan application.

New landlords must also factor in upfront costs like legal fees, property surveys, and potential refurbishments. It’s crucial to assess whether projected rental income can realistically cover both the mortgage and additional expenses.

Risk and Regulation Considerations

Entering the BTL market means navigating both financial risk and regulatory responsibility. First-time landlords must comply with legal obligations such as property licensing, safety checks, and tenant rights. Furthermore, tax treatment has changed—mortgage interest relief is no longer fully deductible, potentially affecting net returns. In a high-interest environment, thorough due diligence is more critical than ever.

Practical Tips / Recommendations

1. Get Pre-Approval: Knowing your borrowing limit helps narrow property searches and set realistic expectations.
2. Use a Letting Agent: Especially helpful for new landlords unfamiliar with tenant management and compliance.
3. Run Detailed Calculations: Include all costs—mortgage, maintenance, insurance, void periods—in your planning.
4. Choose High-Demand Areas: Focus on regions with strong rental yields and low vacancy rates.
5. Seek Expert Advice: Work with professionals familiar with first time BTL mortgage scenarios.

Frequently Asked Questions

What deposit is needed for a first time buy to let mortgage?

Typically 20 – 25% of the property value, though it may vary by lender.

Can I get a buy-to-let mortgage with no landlord experience?

Yes, but expect stricter lending criteria and potential income requirements.

How is affordability assessed for BTL mortgages?

Lenders use rental income stress tests and may also consider your personal income.

Is buy-to-let still profitable with high interest rates?

It can be, especially in high-demand areas, but margins are tighter, requiring careful planning.

Do I need a licence as a landlord?

Depending on the property location and type, you may need a local authority licence.

We specialise in supporting new landlords with tailored mortgage solutions. As a fully FCA-regulated broker, we offer expert advice across a broad lender panel—at no cost to you. Our mission is to simplify the mortgage process and ensure you’re set up for long-term success.

Your property may be repossessed if you do not keep up repayments on your mortgage.