Updated: December 16, 2021

Buy-To-Let Mortgages for New Build Properties

Considering a new build as an investment? Financing can be simple! Find out rates, lenders & how to get a buy to let new build mortgage in our expert guide.

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 16, 2021

With fewer lenders to choose from, buy to let (BTL) mortgages for new builds aren’t quite as straightforward as BTL mortgages for older properties. But there are mortgage providers who operate in this niche end of the market and with a solid application there is no reason why you shouldn’t be able to get approved.

In this article we’ll discuss the difference between buying new or ‘old’ rental properties and explain how to find the right lender for your circumstances.

Can you get a buy to let mortgage on a new build property?

Yes. While some mainstream lenders shy away from this type of lending, there are lots of specialist lenders who approve deals every day. In many cases, specialist lenders offer more favourable rates than high street banks.

Often the most challenging part of getting approved is finding the right provider as eligibility criteria varies significantly from lender to lender.

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The difference between newer and older investment properties

Providers see mortgages for new build buy to lets as riskier than those on older properties. This is because there is no rental history to look back on and lenders cannot always conduct a physical assessment of the property – particularly if an investor is looking to find a deal pre-completion.

There are lenders who will agree to a mortgage ‘off-plan’ (before a property has been completed). The additional risks of delays or fluctuating prices mean there are even fewer lenders operating in this niche, but it can be a good way to grab a bargain.

How a broker can help

This is a specialist area of borrowing that requires insider knowledge of the industry. Buy-to-let mortgage brokers with experience in arranging investment mortgages for new build properties have solid working relationships with the key players in the industry and understand the nuances between each providers’ lending criteria.

It’s recommended that you speak to a broker before approaching any lender unless you have significant knowledge of this niche and the various deals that are available as these types of mortgages are more difficult to get and the way you package your application can have an impact on its outcome.

Make an enquiry with us and we’ll match you with a buy-to-let broker who specialises in new build mortgages for a free, no-obligation chat today.

Eligibility criteria

Most lenders will only approve a new build buy-to-let mortgage after seeing evidence of a 10-year NHBC warranty on the property.

Furthermore, some lenders will only approve buy to let mortgages for existing landlords with a history of successful investments and assets that can be used as collateral. Others are happy to lend to new investors provided you can prove the loan is affordable.

You will also need to meet the provider’s standard criteria in terms of:

  • Credit history: If you have bad credit you may struggle to find any lender willing to accept your application without the support of a broker.
  • Affordability: You may need to prove you have a minimum non-rental income of up to £40,000 per annum and, depending on the lender, the rental income will typically need to cover between 125% – 140% of your monthly mortgage repayments.

For leasehold flats or maisonettes, the term of the lease must typically have 85 years or more left to run.

Deposit amounts

A standard BTL usually requires a deposit of at least 10%. For a new build you will typically need a 15% deposit if the rest of your application closely matches the lenders’ criteria. Where your application differs significantly from a provider’s risk profile, it may be rejected outright or you might be asked to provide a larger deposit. It is not unusual for lenders to ask for up to 35%.

That said, there are lenders who will approve mortgages up to 95% loan to value (LTV) on houses and bungalows, and 85% on flats or maisonettes. Some providers have a sliding scale for LTV depending on the price of the property. For example:

Property Price Maximum LTV
Up to £500k 80%
£500k – £700k 75%
£700k – £1m 70%
£1m+: 65%

Note: these examples are for illustrative purposes only.

Portfolio investors looking to top slice are usually restricted to a maximum LTV of 75% and will need to raise a deposit of 25% in cash or assets.

A higher deposit may be required if the new build has any elements of non-standard construction attached to it.

Which lenders offer buy to let mortgages on new builds?

There is no shortage of lenders willing to offer BTLs on new builds and many well-known banks and building societies will look at applications if you meet their usual lending criteria and have a deposit of 15-25%.

These lenders include…

  • HSBC: LTV 85% (exclusively via a broker)
  • Clydesdale Bank: LTV 80%
  • Loughborough BS: LTV 80%
  • Barclays: LTV 75%
  • TSB: LTV 75%

With a 25% deposit you can expect to be offered a rate of between 2.12% and 2.85% on properties worth up to £1 million

With a larger deposit of, for example 40%, your rate might come down as low as 1.89%

The exact terms of any deal you get approved for will be determined by comparing your application to the lender’s risk profile. While this list may suggest that HSBC is the best lender to approach, you are strongly advised to apply with a lender whose risk profile most closely matches your circumstances, as a rejection can have a negative impact on your credit file and harm future applications.

Specialist lenders sometimes have better rates and exclusive deals only available through a broker.

Get matched with a buy to let mortgage broker who specialises in new builds

Our broker matching service will put you in touch with a buy to let mortgage advisor. After a brief call to get an understanding of your situation and any prior history of buy to lets, we will connect you with a broker who has a track record of success in finding the best mortgage deals for people just like you.

If you choose to go it alone, you may well find your application is turned down or that you end up accepting a rate far higher than you could have been offered. An expert new build buy to let mortgage broker will narrow down your choice of lenders and compare the best commercially available deals with exclusive rates for those applying through a broker.

Call now on 0808 189 0463 or enquire online to arrange a free no-obligation chat.

Ask us a question

We can help! We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Buy-To-Let mortgages. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

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!

FCA Disclaimer

*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 that 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.

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