Why are buy-to-let deposits higher than residential mortgage deposits?

Buy-to-let is a means of generating income, both through monthly rent and capital gains, while residential home ownership is designed to furnish people with the stability of owning their own property. Buy-to-let is seen as a business venture and therefore the deposit required for a buy-to-let mortgage is higher, based on the affordability criteria.

Generally, buy-to-let mortgages require a deposit of at least 20-25% of the property’s value. Some lenders may well ask for more: 40% deposits are not uncommon for buy-to-let mortgages.

*The information provided should not be taken as financial advice in relation to the UK property market or property investment advice.

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