Buy-to-Let Finance

Buy-to-Let Mortgage Support

Buy-to-let mortgages are used to purchase or refinance residential property intended to be let to tenants. They are assessed differently to owner-occupied residential mortgages — primarily on the rental income the property generates, alongside the borrower's personal circumstances.

NexGen Finance helps help clients access buy-to-let mortgage options based on their individual circumstances, property type and portfolio structure. Where regulated mortgage advice is required, this is referred to authorised authorised commercial finance broker partners.

Regulated vs Unregulated Buy-to-Let

Most buy-to-let mortgages are not regulated by the FCA — they are commercial agreements between the lender and the landlord. However, some buy-to-let mortgages are regulated. A buy-to-let mortgage is regulated where the property is or has been occupied by the borrower or a close family member (a "consumer buy-to-let" or CBTL mortgage).

Where a buy-to-let mortgage is regulated, advice must be provided by an FCA-authorised adviser. NexGen Finance is not a lender and does not provide regulated financial advice. Suitable enquiries may be referred to commercial finance broker partners. Funding is subject to status, affordability, lender criteria and approval.

HMO Finance

Houses in multiple occupation (HMOs) are properties let to three or more tenants forming more than one household, sharing communal facilities. HMO properties typically require specialist lenders because they are assessed differently to standard buy-to-let properties.

Key HMO finance considerations include:

• ✓ HMO licensing requirements (mandatory, additional and selective licensing)
• ✓ Number of bedrooms and rooms let
• ✓ Room-by-room rental income versus void periods
• ✓ Property condition and compliance with HMO standards
• ✓ Borrower's landlord experience

Limited Company Buy-to-Let

Many landlords now purchase buy-to-let properties through limited companies — typically special purpose vehicles (SPVs) or trading limited companies. This can offer tax advantages for some landlords, particularly regarding mortgage interest relief, though individual tax advice should always be sought from a qualified tax adviser.

Limited company buy-to-let lenders typically require:

• ✓ Personal guarantees from company directors
• ✓ Details of the SPV or company structure
• ✓ Company accounts (where the company has been trading)
• ✓ Rental income coverage calculations
• ✓ Director credit profile

Portfolio Landlord Finance

Lenders define a portfolio landlord as a borrower with four or more mortgaged buy-to-let properties. Portfolio landlords face additional lender scrutiny following PRA guidelines introduced in 2017, which require lenders to assess portfolio landlords' entire property portfolios — not just the individual property being financed.

NexGen Finance can help connect portfolio landlords with specialist lenders who understand the additional complexity of portfolio landlord applications, including portfolio rental calculations and ICR assessments across the full portfolio.

Rental Stress Testing

Buy-to-let lenders use rental stress tests to assess whether the rental income from the property is sufficient to cover the mortgage payments at a higher notional interest rate. The stress test rate and rental coverage ratio (often 125% to 145%) varies between lenders. For higher rate taxpayers, lenders typically apply higher stress test rates.

Understanding how rental stress testing works can help landlords plan their finance structure more effectively before making applications.

How NexGen Finance Can Help

NexGen Finance helps support landlords with buy-to-let mortgage options suited to their circumstances, property type and portfolio structure. We can help connect you with specialist lenders and brokers across the buy-to-let market, including those with appetite for HMO, portfolio landlord and limited company applications.