Planning a buy to let in 2026? Deposit rules, rental coverage tests and lender affordability checks have all tightened in recent years. The good news is that with clear preparation you can still line up a solid application and lock in a product that fits your goals. At We Do Mortgages, we help landlords across Essex source suitable buy to let finance and handle the application end to end so you can focus on the investment.
The quick view: minimum deposits, stress tests and income
For most mainstream buy to let cases, a 25% deposit is the practical minimum. Some lenders will stretch to 20% if the rent is strong and the rest of the case is very clean, but pricing is often higher and choice narrows. If you can put in 40%, you usually see a wider product range and keener rates. Affordability is then tested using an Interest Coverage Ratio (ICR), typically somewhere between 125% and 145% of the mortgage interest calculated at a stressed rate rather than your pay rate. Lenders also like to see a baseline level of personal income, commonly around £20,000 to £25,000 a year, to show you can manage voids and running costs, though a few have lower or no minimums depending on the strength of the application.
How much deposit for a £200,000 buy to let?
On a £200,000 purchase, a 25% deposit means £50,000 down with a £150,000 mortgage. If you only put down 20% (£40,000), you may still proceed, but lenders will look for robust rental cover and you’ll have fewer products to choose from. At 40% (£80,000), the numbers generally become easier: stress tests are kinder and rates often improve. While 25% isn’t a hard rule in every case, it’s the realistic baseline, especially if the property is quirky, your credit is thin, or the lender’s appetite is tighter.
Understanding ICR and stress tests in 2026
Lenders want your rent to clear the interest with a buffer. Basic rate taxpayers will often see an ICR target around 125%, while higher and additional rate taxpayers can be assessed closer to 145% to reflect tax drag on profits. The other variable is the stress rate. This isn’t your pay rate; it’s a notional figure set several points higher to build headroom. As an illustration, if a lender stresses a £150,000 interest-only loan at 7%, the stressed monthly interest is roughly £875. With a 145% ICR, the rent target would sit near £1,269 per month. If your expected rent falls short, the usual levers are to reduce the loan (put more deposit in), consider a longer fixed term if it comes with a lower stress approach, or revisit the property and rent assumptions.
What income do you need for a buy to let mortgage?
Buy to let affordability leans on rental coverage, but personal income still matters. Many lenders look for £20,000 to £25,000 a year as a guide, with flexibility for experienced landlords or particularly strong portfolios. You’ll normally evidence earnings with recent payslips and a P60 if employed, or two years’ SA302s and tax year overviews if self employed. Limited company directors should have accounts and tax documents ready. Commitments such as credit cards, personal loans and childcare costs are considered too, so trimming balances and avoiding new borrowing before you apply is sensible.
Limited company vs personal ownership, a simple view
This isn’t tax advice, but it’s useful to know how lenders differ. Personal ownership is often simpler to document and attracts a broad lender panel, though higher rate taxpayers can face tighter ICR assumptions. Special purpose vehicle (SPV) limited companies are commonly assessed at around 125% ICR regardless of your personal tax band, which can improve borrowing power. Rates and fees can be a touch higher, and personal guarantees are standard. You’ll also need company documents and, in many cases, an accountant’s input. The right route depends on your plans, tax position and exit. Speak to your accountant alongside mortgage advice so the structure and funding work together.
How hard is it to get a buy to let mortgage?
With a 25% deposit, clean credit and a property that rents well, the process can be straightforward. It becomes trickier when the rent only marginally meets the stress test, the deposit drops under 25%, there’s recent adverse credit, or the property is outside mainstream appetite, such as a flat above commercial premises, a very small studio or a multi‑unit block. In those cases, lender choice narrows and criteria matter more, which is where a broker can guide you to the right fit.
Where could you invest with a £25,000 budget?
A £25,000 deposit usually points to purchase prices around £100,000 to £125,000 if you need 20% to 25% down, before you account for Stamp Duty, legal costs and a sensible buffer for works or initial voids. That price bracket is more common in parts of the North and Midlands and in selected coastal or commuter towns. The key is net yield after costs and the likelihood of passing the rental stress at realistic rent levels. If you’re local to Essex and want ideas, we can talk through typical rents and values in nearby areas and sense check coverage before you commit.
Bigger deposits can improve affordability and choice
Putting in 40% often softens the stress test, opens up more lenders and rate tiers, and lowers your monthly cost, which helps cash flow and resilience. If your figures are tight, you could look at increasing the deposit through savings, gifted funds or equity release from another property, subject to individual advice and overall suitability.
Personal prep before January 2026 renewals
If a fixed rate ends in early 2026, start preparing now. Get a current rent check from a letting agent or use tenancy records so you can evidence income. Tidy your credit by reducing card balances, avoiding new borrowing and correcting any errors on your file. Organise documents early: ID, proof of address, three months of bank statements, payslips or SA302s, existing mortgage statements, your AST and, if relevant, a simple portfolio schedule. Review the property too; small improvements can justify a stronger rent and improve ICR, and you should keep safety certificates and EPCs up to date. Many lenders will issue product transfers and remortgage offers up to six months ahead, so an early appraisal can help you avoid slipping onto a standard variable rate.
Remortgaging and early repayment charges
If you’re thinking of switching before your current fix ends, check early repayment charges carefully. Moving too soon can cost more than it saves. A product transfer with your existing lender might be cleaner, while a remortgage to a new lender can sometimes be set with a future‑dated completion. A broker can model each path, including fees, ERCs and new rates, so you can compare total cost rather than just the headline rate.
Limited company portfolio tips
Portfolio landlords should keep an up‑to‑date spreadsheet covering properties, loan balances, rents, values and EPC ratings. Lenders look at the whole picture, coverage and leverage across the portfolio, not just the subject property. Regular rent reviews and sensible gearing make future applications smoother and reduce surprises at renewal.
How We Do Mortgages can help
We’ll assess your deposit options, test rental coverage across multiple lenders and manage the application from first checks to completion. You’ll get a clear plan, a document checklist and proactive updates. If you want local support in Essex, our team can compare options and timelines and talk through the trade‑offs. If you prefer to speak with a local specialist, you can reach a friendly mortgage broker in Southend for guidance on investment choices and remortgage timing. For dedicated investor support, explore our buy to let mortgage information for Hadleigh to see how we help from first enquiry to completion. If you’re in Leigh or nearby and want to talk through next steps, we can arrange a quick sense check of your figures.
Key takeaways for 2026
Aim for a 25% deposit as a baseline; bigger deposits often unlock better rates and smoother ICR passes. Check rental coverage early using realistic rents and a stressed rate, then adjust deposit or loan size if the numbers are tight. Expect lenders to ask for minimum income and solid documents even for interest‑only. Choose between personal and limited company ownership with both mortgage and tax input. Start remortgage planning six to nine months ahead, keep an eye on early repayment charges and compare a product transfer with a full remortgage before you decide.
Your property may be repossessed if you do not keep up repayments on your mortgage. Some forms of buy to let mortgages are not regulated by the Financial Conduct Authority. This guide is for information only; it is not advice. Always read the lender’s key facts illustration before you decide.
