25% deposit standard, ICR stress tests explained — L&C · Paragon · The Mortgage Works · BM Solutions compared
A buy-to-let (BTL) mortgage is assessed differently from a residential mortgage — lenders focus on rental income covering the mortgage interest, not just your personal income. The right choice depends on whether you are buying in your own name or through a limited company, how many properties you own, and whether a broker or direct lender approach is more appropriate.
| Criteria | Typical requirement | Notes |
|---|---|---|
| Minimum deposit | 25% (75% LTV) | Some lenders go to 20% at higher rates |
| ICR (personal) | Rent ≥ 125–130% of stressed interest | Stressed rate typically 5.5–6% |
| ICR (Ltd company / HR taxpayer) | Rent ≥ 145% of stressed interest | Higher hurdle for tax efficiency structures |
| Minimum income | Often £25,000/yr personal income | Some lenders waive this for experienced landlords |
| Max properties | Varies — "portfolio" = 4+ properties | Portfolio landlords need specialist lenders |
| Property type | Standard construction, not HMO | HMO and MUFB need specialist products |
For most landlords — especially first-time or growing portfolio — starting with L&C gives access to the full BTL market including specialist lenders not accessible direct. L&C's BTL advisers understand ICR calculations, limited company lending and HMO products. No broker fee means you pay nothing for advice that can save thousands in interest.
We may earn a commission if you apply via our link — this doesn't affect our editorial independence.
The Mortgage Works (TMW) is Nationwide's specialist BTL lending arm and one of the UK's largest BTL lenders. Consistently competitive rates, available through brokers, with clear criteria for both personal and limited company purchases. TMW accepts portfolio landlords (4+ properties) and offers a range of fixed and tracker products.
We may earn a commission if you apply via our link — this doesn't affect our editorial independence.
BM Solutions is the BTL specialist arm of Halifax (Lloyds Banking Group) and one of the largest BTL lenders in the UK. Accessible via brokers only, BM Solutions offers competitive 2-year and 5-year fixed rates across standard residential BTL and limited company structures. Good for landlords with straightforward portfolios who want a mainstream lender's rates and stability.
We may earn a commission if you apply via our link — this doesn't affect our editorial independence.
Paragon specialises in professional and portfolio landlords (typically 4+ properties). They have the most sophisticated underwriting for complex portfolios — HMO, multi-unit freehold blocks (MUFB), limited company SPVs, and mixed residential/commercial. For a professional landlord growing a portfolio, Paragon's expertise in complex cases is unmatched among mainstream BTL lenders.
We may earn a commission if you apply via our link — this doesn't affect our editorial independence.
| Factor | Personal name | Limited company |
|---|---|---|
| Mortgage rates | Lower (wider choice) | Higher (+0.5–1% typically) |
| Mortgage interest tax | 20% credit only (Section 24) | Fully deductible as business expense |
| Income tax on profits | 20–45% on rental profit | 19–25% Corporation Tax |
| Taking money out | Direct — no extra step | Salary + dividends — tax event |
| Admin/accountant | Simple | Annual accounts, CT return, Companies House |
| Best for | Basic-rate taxpayers, 1–2 properties | Higher-rate taxpayers, growing portfolio |
L&C broker to compare the market, then consider TMW or BM Solutions for competitive rates.
L&C or specialist broker for limited company BTL lenders. Get accountant advice on SPV structure first.
Paragon via broker — specialist underwriting for complex portfolios. Mainstream lenders often less flexible.
Paragon or specialist broker — most mainstream BTL lenders won't lend on HMO without a specialist product.
Most lenders require a minimum 25% deposit (75% LTV). Some specialist lenders go to 80% LTV (20% deposit) but with higher rates. The rental income must also meet the lender's Interest Coverage Ratio stress test — typically rental income must be 125–145% of the mortgage interest payment at a stressed rate of around 5.5–6%.
Higher-rate taxpayers who plan to grow a portfolio often benefit from a limited company because mortgage interest is fully deductible (avoiding Section 24 restrictions). However, limited company BTL mortgages carry higher rates (+0.5–1%) and fees. If you plan to hold just one or two properties and are a basic-rate taxpayer, personal name is usually simpler and cheaper. Get specialist tax advice before deciding.
The ICR checks rental income covers the mortgage interest by a sufficient margin. Most lenders require rental income at least 125% of interest at a stressed rate (typically 5.5–6%). For limited company or higher-rate taxpayer applicants, some lenders apply 145%. Example: a £200,000 BTL at 5.5% stress = £11,000/yr interest. At 125% ICR you need £13,750/yr rent (£1,146/mo).
Yes — many lenders accept first-time landlords, particularly if you own your own home. Rates for first-time landlords are typically the same as for existing landlords. Specialist portfolio lenders (Paragon) may require existing BTL experience. A whole-of-market broker can identify the best lenders for your profile.