Historical guide: written for the circumstances and rules of August 2026. This article forms part of our backdated information archive; it is not a live product quotation.
A buy-to-let deposit is normally larger than the deposit needed for an ordinary residential purchase. Around 25% is a common starting point for discussion, but it is not a universal minimum or a promise of acceptance. Some lenders may consider a smaller deposit on particular cases; others require more. If you are planning a rental purchase in Hampshire in August 2026, the rent, property and ownership structure all need checking alongside the cash available.
Translate the deposit into loan to value
On a £240,000 purchase, a 25% deposit is £60,000 and the mortgage is £180,000 before any fees added. That is 75% loan to value. A 20% deposit would be £48,000 with a £192,000 loan, or 80% LTV. Those figures are arithmetic illustrations, not quotations or market averages. Products at a higher LTV may have narrower criteria or different pricing, and a lender valuation below the agreed price can leave you needing more cash. Always base the final budget on the lender's accepted value and offer terms.
The rent can limit borrowing before the deposit does
Buy-to-let lenders commonly assess rental income against a stressed interest calculation, sometimes described as an interest coverage ratio. The required rent, stress rate and treatment of the applicant vary with lender policy, product and tax position. To illustrate the mechanics only, £180,000 stressed at an assumed 6% produces £900 monthly interest; an assumed 145% cover would require £1,305 monthly rent. Those assumptions are not a statement of available August 2026 products. The lender's actual assessment may be different and may limit borrowing even when you have the stated deposit.
Keep a separate purchase-cost pot
Your deposit is not the whole cash requirement. Allow for SDLT where payable, conveyancing, valuation, surveys, lender fees and any applicable broker fee. Additional residential purchases can attract higher-rate SDLT in England, with ownership history, company purchases and non-residence affecting the answer. Ask your conveyancer for the correct calculation at the planned completion date. You also need money after completion: insurance, safety work, maintenance, managing-agent costs and periods without rent do not disappear because the mortgage lender has accepted the application. A fully committed deposit leaves little resilience when the first repair arrives.
Personal ownership and a company are different cases
A limited company does not automatically give you cheaper borrowing or a smaller deposit requirement. Lenders consider company structure, directors and often personal guarantees, and the tax and legal consequences need separate advice. For personal ownership, the lender still needs to understand the landlord's income and commitments according to its criteria. Do not choose an ownership route solely from a mortgage rate comparison. Transferring an existing property later can create costs and tax consequences, so speak to a qualified accountant and solicitor before deciding rather than treating incorporation as a simple administrative change.
The property and tenancy need to fit
A standard single-household letting is not the same as an HMO, student arrangement, holiday let or property with several units. Licensing, planning, lease restrictions and lender criteria can differ. Tell the broker exactly how you intend to let the property and check local authority requirements rather than assuming that a residential listing can become any type of rental. The lender's valuer assesses expected rent and security, not a guaranteed return. Rent advertised on a nearby property is useful context but may not establish the sustainable rent for the home you are buying.
Be clear about where the deposit comes from
Savings, sale proceeds, gifts or borrowing against another property need to be acceptable to the lender and evidenced for legal checks. A borrowed deposit also creates another commitment and can change the affordability of the wider plan. If company money is involved, have the accountant explain how it is recorded and the lender confirm its requirements. Avoid moving money through several accounts without keeping the trail. Clear source-of-funds evidence helps the process, but it does not override a lender's rule that a particular source is not acceptable for the case.
Assess the investment beyond the approval
Model a period without rent, a significant repair and a higher future mortgage payment. Consider the capital balance at the end if using interest-only and whether the exit depends on a sale or refinance. Neither future property values nor refinancing terms are guaranteed. We can explore deposit and rental-cover calculations using relevant lender criteria, while an accountant and solicitor address tax and legal duties. Bring the price, likely rent, deposit source, existing properties and ownership plans. That creates a more useful starting point than asking only for the smallest deposit a lender might advertise.
Talk it through with Easy Mortgages
If you would like to understand how this relates to your own plans, contact Easy Mortgages for an initial conversation. We can explain the next steps and the information a personalised review would need, without assuming a particular product is right for you.
This is general information, not personal mortgage, insurance, legal or tax advice. Rules, lender criteria and products can change after August 2026. Any recommendation requires an assessment of your circumstances. Your home may be repossessed if you do not keep up repayments on your mortgage or other borrowing secured on it.