Best Mortgage Lenders for Investment Property

By | June 22, 2022

Investment Property Mortgages Guide

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Investment property mortgages are a very broad product category that includes everything from buy-to-let loans to commercial mortgages. And if you’re thinking of applying for one or simply want more information about this type of finance, you’ve come to the right place.

In our guide to investment property mortgages, you’ll learn exactly what type of finance falls into this category, how to get an investment mortgage, what kind of rates to expect and where to turn for the right advice.

Plus in our FAQ section, we field the questions we hear most often from customers who are looking for finance to buy a property for investment purposes.

What is an investment property mortgage?

An investment property mortgage is a type of mortgage used to buy property with the sole intention of generating rental income and/or an eventual profit from its sale. This is a broad product category, and it includes everything from buy-to-let properties to commercial premises, but properties bought for personal use do not qualify as investments.

The specific type of mortgage you’d need for investment property will depend on which category the property you’re buying falls into. There are standalone product categories for…

  • Buy-to-let (BTL) mortgages
  • Commercial mortgages
  • Holiday lets
  • Overseas buy to lets
  • Buy to sell mortgages

All of the above are investment property mortgages, and within these categories are dozens of sub-categories. For example, HMO mortgages and portfolio agreements are offshoots of buy to let, while commercial mortgages could include finance for offices, shops, factories and more. A broker who specialises in mortgages for investment properties will be able to tell you exactly what type of finance you need to apply for and help you find the best deal for it.

One distinction we need to make at this point is the difference between second home and investment property mortgages, as they are by no means one and the same.

Second home vs. investment property mortgages

Second home mortgages are a completely different product category to mortgages on investment property. The main thing setting them apart is that second home mortgages are residential and can be used to buy properties that are intended for personal use. This includes holiday homes and secondary residences that you might live in part time.

You wouldn’t use a second home mortgage to buy investment property because they’re residential loans which cannot be used for properties the buyer isn’t planning to live in.

Can you get a second mortgage for rental property?

Yes, in the sense that getting a second mortgage for an investment property in addition to a main residential mortgage is possible. In fact, some investment mortgage lenders might insist that you already have a mortgage, as there are buy-to-let providers who won’t lend to anyone who hasn’t been paying a residential mortgage for a set amount of time.

To avoid any confusion around the terminology we’re using here, this example refers to taking out an investment mortgagein addition to an existing residential mortgage. The investment mortgage would be a second mortgage, but it wouldn’t be a secondhome mortgage, as they are a product category in their own right, and an entirely different kettle of fish.

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We know everyone’s circumstances are different, that’s why we work with mortgage brokers who are experts in all different mortgage subjects.

Ask us a question and we’ll get the best expert to help.

How to get a mortgage for an investment property

The process will differ greatly depending on the type of investment property you’ve got your eye on. There are two important steps you should take to start your journey…

  • Do your research:Read up on the rules and criteria for the type of investment you’re looking at. You can find summaries below and more details in the standalone guides we’ve linked to. Doing some homework will give you an idea of the documents you’ll need and the lender requirements you will need to meet to gain approval.
  • Speak to a broker who specialises in securing finance for investment properties:This is essential if you want to get the right advice and the best deal on your investment mortgage. Speaking to the right mortgage broker before you proceed will put you in good stead for your application.
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Buy-to-let mortgages

To get a buy-to-let mortgage, the main thing you will need is a viable investment and a way to evidence this to the mortgage lender. Buy-to-let mortgage providers largely base their eligibility criteria on the property’s rental potential, and with most of them, the projected income will need to cover the mortgage payments by at least 125%; even higher than that, in some cases.

In addition to the property’s projected rental income, buy-to-let mortgage providers typically base their lending decision on the following factors…

  • Deposit
    :The absolute minimum you’re likely to need is 15% of the property’s value, but some lenders ask for more, especially if there’s any risk involved
  • Credit history:The cleaner your credit report, the better, although there are specialist lenders for customers with various types of bad credit on their files.
  • Income and outgoings:Some lenders have no minimum income requirements for a BTL, but others won’t lend to anyone earning less than £25,000. Most providers will also factor any significant outgoings you have into their affordability calculations.
  • Landlord experience:Although some BTL lenders are willing to offer mortgages to first-time landlords, having landlord experience will usually strengthen your case.

These are the main variables the lender will look at if you’re applying for a buy-to-let mortgage, but you can read about the full criteria in our complete guide to buy-to-let mortgages.

Commercial investment mortgages

The main criteria for investment mortgages on commercial property is as follows…

  • Viability of the investment:Commercial investment mortgages can be more flexible than standard buy-to-lets as this sector is unregulated, meaning that lenders can judge applications on a case-by-case basis. The viability of the investment is the main factor here, backed up by a solid business plan. Some lenders also like to see that you have a strong track record in the relevant industry, though this isn’t alway essential.
  • Deposit
    :Requirements are usually higher for commercial investment mortgages, and you can expect the lender to ask you for anywhere between 25-50%.
  • Credit history:Having clean credit might give you a better chance of landing the best rates but, due to the extra flexibility in the commercial sector, there are often lending options for commercial investment borrowers with various types of adverse credit.

You can read about the full criteria for commercial investment mortgages and the steps you need to take to apply for one in our guide to commercial mortgages.

Holiday lets

Similar to buy-to-let mortgages, investment mortgages for holiday lets often hinge on the projected rental income, with lenders expecting at least 140% coverage. Deposit requirements can also be higher, starting at around 25% at most mortgage lenders.

Read more about the requirements and criteria for holiday let mortgages in our complete guide.

Overseas buy to lets

Like holiday lets, overseas investment mortgages are another offshoot of buy-to-let, so the rules and criteria around them are similar; but keep in mind that deposit requirements and rental income requirements can vary depending on which country you’re buying.

Other variables to be aware of include the tax implications of investing in specific territories, whether planning permission is needed and how the local exchange rate could affect your investment. You might even need to enlist the help of a local letting agent to find tenants.

Read more about the requirements for overseas buy to let mortgages in our standalone guide.

Buy to sell mortgages

Buy to sell mortgages allow you to purchase a property that you intend to renovate and sell for a profit. Although they can be used for investment purposes, they’re essentially residential mortgages with much shorter terms, usually ranging from a few months to several years.

You can read more about your potential buy to sell mortgage options in our standalone guide.

Why you should start by speaking to an investment mortgage broker

The best way to kickstart an investment mortgage application is by speaking to a broker who specialises in the type of finance you’re looking for. In our broker network, there are commercial mortgage experts, buy-to-let specialists, holiday let advisors and brokers whose bread and butter is overseas property. Whatever type of investment you’re planning to make, we can find you a mortgage broker who advises in that field every single day.

An investment mortgage broker will know exactly which lenders are best positioned to offer favourable rates to a customer with your needs and circumstances, so you can rest assured that you’ll find the right one first time and end up with the best possible deal.

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A broker will search the entire market for you, tracking down every product that meets your specifications, offer you bespoke advice throughout and help you with the paperwork.

Since the market is so vast, attempting to navigate it without the expertise of an investment mortgage broker could mean you end up paying more for your mortgage, waste time looking for the right product and are left with unnecessary marks on your credit report.

Mortgages rates for investment properties

Interest rates for investment mortgages are typically higher than mortgages for residential properties of equivalent size and value. Generally speaking, BTL mortgage rates can be up to 1% higher than comparable residential products and fees can be higher as well.

Rates for commercial mortgages are always bespoke and calculated by the lender based on the level of risk the deal carries. To work out how much risk there is, they will look at the amount of deposit you have, your credit report, your trading history and the type of property you’re buying.

Getting the best rates on an investment mortgage is a case of having access to as many lenders as possible and meeting their eligibility criteria down to a tee. Working with a mortgage broker who specialises in investment properties can dramatically increase your chances of landing the best rates, as they have access to every lender on the market and can offer you advice about hope to optimise your credit report and boost your general eligibility.

Second home vs. investment property rates

Mortgage rates for a buy-to-let property are typically higher than they would be for a residential mortgage on a second home of equivalent size and value. This is because mortgage lenders generally believe the risk of a default is higher when there are tenants involved, especially if there is a possibility of rental void periods where the property could be empty.

Investment mortgage alternatives

There are other ways that you could potentially raise funds to buy an investment property besides taking out a mortgage, and they would typically include…

  • Remortgaging properties you already own:Depending on how much equity you hold in other properties, remortgaging one or more of them could free up enough capital to buy a new investment property outright, or at least put towards it. Landlords with large property portfolios often use this method to grow their business.
  • Bridging loans:If you need to buy an investment property quickly, a bridging loan could provide fast funds to complete the purchase. You could later remortgage onto an investment mortgage to pay off the debt at the end of the term.
  • Second charge mortgages:It may be possible to secure a second charge mortgage against any properties you already own, providing you meet the lender’s criteria and have enough equity. This might be an option for borrowers who don’t meet the criteria for an investment mortgage, but do qualify for a second charge mortgage.
  • Development finance
    :Only an option if you have the means and knowhow to build your own investment property from scratch, or oversee its construction. This would likely involve remortgaging onto a traditional investment mortgage further down the line.

Whether you should choose one of these options over an investment mortgage is a question to put to a mortgage broker. They will be able to go through each alternative with you, weighing up and pros and cons, to help you make an informed decision about your property investment.

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Need a mortgage for an investment property? Get help from an expert!

Need advice about investment property mortgages? We offer a free broker-matching service that will take your needs, circumstances and investment type into account to pair you up with the right expert for the job. Speaking to the right broker before you apply for your mortgage could mean saving time, money and potential disappointment in the long run.

If you’re looking for a rental property, we’ll introduce you to a specialist buy-to-let broker, and if you’re in the market for a commercial property, our broker-matching service will pick out a business mortgage broker who helps customers just like you every day.

Call 0808 189 2301 or make an enquiry and we’ll arrange a free, no-obligation chat between you and your perfect investment broker today.


How many investment property mortgages can I have?

In theory, there is no strict limit since there are lenders who cater for portfolio landlords with an unlimited number of properties on their books. That said, other lenders do impose some restrictions and might limit either the total number of BTL mortgages they’re willing to offer to one applicant, or the total amount one applicant can borrow for their portfolio.

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The typical cap for buy-to-let mortgages can be anywhere between three and 10 properties, while maximum borrowing for one application can be around £3 million.

If you’ve looking to take out investment mortgages for a large number of properties, your best bet is to work with a specialist buy-to-let mortgage broker who can help you find a lender with no limit on the number of properties they’re willing to offer finance for.

Can I get a second mortgage on my rental property?

Yes, getting a 2nd mortgage for an investment property you’ve already secured a buy-to-let mortgage against is possible, as long as you hold enough equity in the property and the lender is convinced your rental income is high enough to cover both debts secured on the BTL.

This is known as a second charge buy-to-let mortgage and the debt you’d take on would sit behind any mortgages you already have on the property. This means that the second charge mortgage lender would be second in line for any proceeds that come from a sale of the property, in the event that it has to be repossessed and offloaded to clear the outstanding debts.

How to get a second mortgage for a rental property

Head over to our dedicated second charge buy-to-let mortgages guide to read up on the eligibility criteria for these products, how to apply and how to get the right advice.

Can I get a mortgage to buy a second investment property?

Yes. Many investment mortgage lenders are willing to offer more than one investment mortgage to the same borrower, as long as they can prove they’ll be earning enough income to cover all of the mortgages they’ve taken out. There are even mortgage lenders and brokers who specialise in people with multiple investment properties, known as portfolio landlords.

You can read more in our guide to portfolio mortgages.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

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Pete Mugleston

Mortgage Advisor, MD

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*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Best Mortgage Lenders for Investment Property


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