Minimum Income Required For A Buy To Let Mortgage

Let’s Talk Money and Mortgages – WIS

Gemma: Hi, welcome back to our channel and podcast! My name is Gemma, and here at WIS, we talk about money, mortgages, and positive money mindset.

Today, we’re discussing buy-to-let mortgages and the minimum income requirements for a buy-to-let property.

We have Ifthikar joining us again. For those of you who don’t know, Ifthikar is a trained accountant and mortgage advisor with over 10 years of experience and one of the founding directors here at WIS.

Q1: What is a Buy-to-Let Mortgage?

Ifthikar: A buy-to-let mortgage is when you purchase a property for investment purposes rather than to live in.

You buy a property and rent it out to individuals or families.

The property owner usually owns their own residential home separately.

The main purpose of the property is investment income, not personal residence.

Q2: How Does a Buy-to-Let Mortgage Work?

Ifthikar: Buy-to-let mortgages differ from residential mortgages:

Residential mortgages: Affordability is based mainly on your income.

Buy-to-let mortgages: Affordability is less about your personal income and more about the investment potential.

Banks consider:

• Rental income – How much rent the property will generate.
• Deposit – Usually 25%, though some lenders allow 20% if you pass a stress test.
• Stress testing – Checks what happens if:
• Interest rates increase
• There are periods with no tenants

So, the focus is on property performance, not just your earnings.

Q3: What is the Minimum Income Requirement for a Buy-to-Let Mortgage?

Ifthikar:

Most banks require a minimum personal income of around £25,000.

This varies by lender: Some may require £30,000, or joint income of £25,000 for joint applications.

Important:

Banks want to see that rental income covers mortgage interest.

Even with lower personal income (£30k–£50k), you may still qualify if the property generates enough rent.

Q4: Can You Get a Buy-to-Let Mortgage with No Minimum Income Requirement?

Ifthikar: Yes, some lenders have no minimum income requirement, but:

This does not mean zero income guarantees approval.

Banks will check how you can cover the mortgage if there are no tenants.

Other sources of income, like pension or savings, may be considered.

New contractors may face challenges due to lack of trading history, even if they expect higher future earnings.

Q5: What Should Buyers Be Mindful of When Purchasing a Buy-to-Let Property?

Ifthikar: Factors affecting approval include:

• Deposit – Usually 25%, but higher if you fail stress tests.
• Stress test – Banks assume:
• Interest rate increase
• Vacancy periods (often 25% of the year)
• Tax status – High taxpayers may be considered lower risk than basic taxpayers.
• Term of mortgage – Longer-term deals are generally easier to approve.
• Rental income potential – Must cover mortgage interest and leave some margin.

Q6: Why Are Properties Under £100,000 Sometimes a Problem?

Ifthikar:

Banks have minimum mortgage “floor levels” to make the transaction worthwhile.

Regardless of loan size, banks incur administrative costs (valuation, underwriting, etc.).

If a property is too cheap, the mortgage may not be commercially viable for the lender.

Q7: Are There Any Other Considerations?

Ifthikar:

Some lenders use a “top slice” approach: If stress tests fail, they consider additional income sources to approve the mortgage.

Limited company structures can be more lenient with stress testing.

Longer-term deals may pass tests more easily.

EPC rating is increasingly important:

• Banks may refuse mortgages for properties with low energy ratings (EPC D or below).
• Green initiatives are driving stricter lending criteria.

Q8: Final Advice

Ifthikar:

Buy-to-let requirements have evolved significantly over the years.

Stress tests and minimum property sizes have tightened lending.

Always speak to an advisor before applying.

Plan ahead, check deposit, rental income, EPC rating, and ensure the property passes stress tests.

Gemma: Thank you for joining us today!

Reminder:

These points may not apply to everyone, so check with an advisor.

WIS contact details are below if you need guidance.

As a mortgage is secured against your property, it may be repossessed if you do not keep up with repayments.