Content Writer
Mortgage Advisor & Director
Getting an offset mortgage to purchase a buy-to-let property can be tricky as few lenders offer this type of product. However, it’s not impossible with the right advice. Read on to find out how using a mortgage broker could help you to secure the offset buy-to-let mortgage that suits your needs.
Can you get a buy-to-let offset mortgage?
It is possible to get a buy-to-let offset mortgage, but there are very few lenders that offer them. As it’s quite a niche mortgage type, you would usually need to secure one through a specialist lender. This will also likely involve using an intermediary such as ourselves, as offset buy-to-let mortgages are often unavailable to the general public.
There can be some additional restrictions for buy-to-let borrowers looking for an offset product; for example, some lenders only allow individual landlords, not limited company buy-to-let landlords, to apply.
Lending criteria
Buy-to-let offset mortgage criteria are typically the same as any other buy-to-let mortgage application, but you may need to consider the following in addition:
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The LTV (loan-to-value) may be reduced for an offset mortgage, and given that buy-to-let deposit requirements are already high, this could mean that you need at least 25-30% deposit, depending on the individual lender, the rental property, and your own circumstances
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You’ll need a bank account with the bank or building society providing the mortgage. Some lenders allow both current and savings accounts to be linked to the mortgage, whereas others only allow savings accounts
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You may need to deposit a minimum balance into the savings account in order to qualify, although this varies by lender
Will the interest rates be higher?
Buy-to-let offset mortgage rates tend to be higher than rates on other investment mortgage products, as there are potentially large interest savings to be made over the lifetime of the mortgage. They can also vary depending on whether you take an interest-only or capital repayment style of mortgage repayments, as well as based on the LTV of your loan.
As well as the interest rates, it’s also important to consider any fees attached to the mortgage when comparing offset mortgages with non-offset options.
A broker with experience in this area of the mortgage market can ensure you find the ideal product for your needs and make the best use of your savings. For a free rates comparison with guidance from a buy-to-let offset mortgage expert, get in touch with our team below:
Get personalised advice about offset BTL mortgages
Which lenders are available?
Buy-to-let offset mortgage providers are fairly hard to come by, as many lenders only offer this type of product to residential customers. However, it’s not impossible, and there are lenders out there. A mortgage broker specialising in buy-to-let mortgages will be best placed to help you secure an offset buy-to-let mortgage suited to your needs.
Lenders who have offered this type of mortgage in the past, subject to product availability, include Clydesdale Bank and Family Building Society.
How affordability and repayments are calculated
When you use your savings to offset mortgage interest, the balance of your savings account(s) (or savings and current accounts where applicable) will be combined and used to reduce the interest due on your mortgage balance as follows:
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You borrow a £150,000 to purchase an investment property
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Your linked offset account(s) have a combined balance of £50,000
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You only pay interest on £100,000 worth of your mortgage loan balance
Why choose Teito for your offset BTL mortgage?
To find the best offset buy-to-let mortgage, it’s a good idea to seek advice from a mortgage broker with specific experience in sourcing this type of product. This is a niche area of lending, so finding the right product can be challenging without expert knowledge.
At Teito, we have helped lots of landlords to secure the right type of mortgage for their needs and circumstances. Other customers chose use because:
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We know the niche well and have plenty of experience offering all kinds of investment mortgages
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We have access to the entire market, including specialist lenders who may offer unique deals
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Your initial consultation is always free of charge, and there is no obligation
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We are 5-star rated on leading review websites
So get started today, organise a chat with our buy-to-let mortgage experts
FAQs
Landlords have been unable to offset mortgage interest on their buy-to-let properties against income tax since 2020. However, it’s possible to offset interest payable on your savings against your mortgage interest with an offset mortgage. This would allow you to benefit further from rental income, assuming you transferred it to your linked offset savings account.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.