How much discount can you get with Right to Buy? In England, your Right to Buy discount depends on your home, qualifying tenancy history and location. Although the percentage can reach 70%, current cash caps for new applications range from £16,000 to £38,000.
Qualifying for 40% or 60% doesn’t necessarily mean getting that percentage off your home. The cash cap may produce a smaller reduction.
This guide covers the Right to Buy discount calculation. If you’re still checking the basics, our guide to how Right to Buy works explains the scheme.
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How much Right to Buy discount can you get?
Before any further reductions, your discount is the lower of:
The percentage you qualify for, up to 70% of your home’s market value.
The maximum cash discount for your region, including any local exception.
Houses and flats build up their percentage discounts differently. Your landlord confirms your qualifying tenancy history, valuation and final discount.
The government’s Right to Buy reform announcement sets out future changes to eligibility and percentage discounts. The calculations below reflect the rules currently shown in GOV.UK guidance, checked on 2 October 2026.
How is the Right to Buy discount calculated?
The basic calculation is:
Market value − confirmed discount = purchase price
Item
Example
Market value
£180,000
Confirmed discount
£26,000
Purchase price
£154,000
The discount reduces what you pay. It isn’t money paid into your bank account.
How much discount do you get on a house?
For a house, three to five years of qualifying public-sector tenancy gives a 35% discount. After five years, add one percentage point for each extra qualifying year, up to 70%.
Ten years gives 40%: the starting 35%, plus five percentage points.
House example: North West
Amount
Market value
£150,000
Qualifying tenancy
10 years
Percentage entitlement
40%
Value of percentage discount
£60,000
Regional cash cap
£26,000
Discount after applying the cap
£26,000
Purchase price
£124,000
The £26,000 cap limits the Right to Buy discount, despite the 40% entitlement.
How much discount do you get on a flat?
For a flat, three to five qualifying years gives 50%. After five years, add two percentage points for each additional qualifying year, up to 70%.
Ten years therefore gives 60%, before the cash cap and any further adjustments.
Flat example: Yorkshire and the Humber
Amount
Market value
£120,000
Qualifying tenancy
10 years
Percentage entitlement
60%
Value of percentage discount
£72,000
Regional cash cap
£24,000
Discount after applying the cap
£24,000
Purchase price
£96,000
The government’s Right to Buy guide explains that qualifying public-sector tenancies needn’t be continuous. Relevant periods with different landlords can count. For a joint purchase, the applicant with the longest qualifying history can provide the higher rate, subject to the limits.
What is the maximum Right to Buy discount in your area?
South East: £16,000 applies in Reading Borough, West Berkshire, Hart, Oxford, Vale of the White Horse, Tonbridge and Malling, Epsom and Ewell, and Reigate and Banstead.
London: Barking and Dagenham and Havering have a £38,000 cap.
Your landlord confirms which limit applies to your home.
Why might your Right to Buy discount be lower?
The cash cap is only one limit. Other factors include:
Property value: the percentage calculation starts with the market value, so a lower valuation can mean a lower cash discount.
Qualifying tenancy: fewer qualifying years can mean a lower percentage entitlement.
Previous discounts: a previous discounted public-sector purchase can reduce your entitlement.
Cost floor: qualifying landlord spending on building, acquiring, repairing or maintaining your home can reduce or remove the discount.
Does a longer tenancy always mean a bigger discount?
No. Extra qualifying years can increase the percentage, but may leave the cash discount unchanged once you’ve reached the regional cap.
In the house example above, increasing the entitlement from 40% to 45% would raise the percentage-based figure from £60,000 to £67,500. Both exceed £26,000, so the cap would still limit the discount to £26,000.
What if you applied before 21 November 2024?
Earlier applications: eligible applications received by the landlord before 21 November 2024 can retain the previous cash maximums of £102,400 outside London or £136,400 in London. Percentage limits and other adjustments still apply. These aren’t the standard caps for new applications in 2026.
That doesn’t automatically mean you can buy without a separate cash deposit. The lender still checks your income, affordability, credit history and the property. We would check the confirmed discount and purchase price before assessing suitable mortgage options.
Estimate your Right to Buy purchase price
Use our Right-to-Buy mortgage calculator to explore your discounted purchase price, approximate mortgage amount, potential deposit position and estimated monthly repayments.
Update your estimates when your landlord confirms the figures. Calculator results don’t confirm your statutory discount or mortgage approval.
When to get mortgage advice
Advice can help when you have, or expect, an offer and want to check whether the purchase price is affordable. It’s also useful if you’re unsure about the deposit, self-employed, have adverse credit or are buying a property that may be harder to mortgage.
Our Right-to-Buy mortgage advice can help you assess the borrowing side. Your landlord determines the statutory discount.
[FAQ]
Frequently asked questions
What is the maximum Right to Buy discount in 2026?
For new applications, cash caps range from £16,000 to £38,000. Your percentage entitlement and other adjustments may produce a lower discount.
Can you get a 70% Right to Buy discount?
You can qualify for a 70% percentage entitlement, but the cash cap may mean receiving much less than 70% off the property.
How many years do you need for the maximum discount?
The percentage reaches 70% after 40 qualifying years for a house or 15 for a flat. You may reach the cash cap much earlier.
Is the discount different for houses and flats?
Yes. Houses start at 35% and flats at 50%. After five years, houses gain one percentage point annually and flats gain two.
Can the cost floor reduce your discount?
Yes. Qualifying landlord expenditure can reduce or remove it, increasing the purchase price compared with your initial estimate.
Can the discount count as a mortgage deposit?
Some lenders accept it, but this depends on their criteria and your application. You’ll also need to allow for purchase costs.
Your First Home is a proposed equity loan scheme for first-time buyers purchasing participating new-build homes in England. The government has announced the scheme, but it is not yet open and its full rules have not been published.
The government expects buyers to be able to use a 2.5% deposit alongside a 20% government-backed equity loan, leaving approximately 77.5% to be covered by a mortgage. Further details, including income limits, local property price caps, costs and the implementation timetable, are due at the Budget on 28 October 2026.
Household income limits and local property price caps will apply,
while developers will be expected to contribute towards the costs. The
figures, detailed costs and implementation dates have not been
announced.
Detail
Current position
Country
England
Buyer
Prospective first-time buyers
Property
Participating new-build homes
Buyer deposit
Expected to be 2.5%
Government equity loan
Expected to be 20%
Mortgage requirement
Approximately 77.5%, subject to final rules and lender approval
Interest-free period
Confirmed in principle, but duration unknown
Income limit
Confirmed in principle, but amount unknown
Local property price caps
Confirmed in principle, but amounts unknown
Application date
Not announced
How could the
2.5% deposit and 20% equity loan work?
For an illustrative £300,000 home, the three expected sources of
funding could look like this:
Funding source
Percentage
Illustrative amount
Buyer deposit
2.5%
£7,500
Government equity loan
20%
£60,000
Mortgage
77.5%
£232,500
Total
100%
£300,000
This is a mathematical illustration, not a mortgage quotation or
confirmation of eligibility. A future local price cap could exclude a
£300,000 purchase in some areas, and participating mortgage products
have not been published.
The equity loan would not be a gift or deposit grant. The government
has not explained how repayments would be calculated, when the loan
would become repayable or whether its value would change with the
property’s value.
The scheme is intended for prospective first-time buyers.
It is being developed for England.
The property is expected to be a new build bought from a participating developer.
A household income cap and local property price caps will apply.
What has not been confirmed
How a first-time buyer will be defined for joint applications.
Minimum age and residency requirements.
The exact household income limits.
The local property price caps.
Whether buyers can contribute more than 2.5% themselves.
How gifted deposits will be treated.
Whether there will be scheme-specific evidence rules for self-employed applicants.
Any credit-history requirements beyond normal lender underwriting.
Whether local connections or key-worker status will affect priority.
Scheme eligibility would not guarantee mortgage approval. A lender
would still assess income, expenditure, credit commitments, credit
history and the property.
When we assess a low-deposit first-time buyer case, we would want to
establish whether the scheme rules and the mortgage lender’s criteria
both work. Passing one test would not automatically mean passing the
other.
When will Your First Home
start?
The government says costs and implementation timelines will be announced at the Budget on 28 October 2026, a date confirmed by HM Treasury.
There is currently no official application opening date, application
portal, list of participating lenders or list of participating
developers. The government’s announcement also does not confirm that
buyers will be able to pre-register before the end of 2026.
Buyers can research a realistic budget now, but obtaining an
Agreement in Principle too early may not help because decisions
generally have limited validity. An Agreement
in Principle can indicate an initial borrowing range, but it is not
a mortgage offer.
Varied by scheme period, with the later version restricted to
first-time buyers
Property
Participating new builds
Eligible new builds
Buyer deposit
Expected to be 2.5%
Normally at least 5%
Equity loan
Expected to be 20%
Up to 20% outside London and up to 40% in London under the relevant
scheme rules
Interest-free period
Initial period confirmed, length unknown
Five years
Income and price caps
Household income and local price caps expected
Regional property price caps applied to the 2021 to 2023 scheme
Repayment rules
Not announced
Based on the equity percentage and qualifying property value
The old scheme’s rules for interest, repayment and property changes
should not be assumed to apply to Your First Home.
Is Your First Home
the same as First Homes?
No. Your First Home is a proposed equity loan. First Homes is an existing
English scheme that lets eligible buyers purchase for 30% to 50%
below market value. The discount remains attached when the home is
resold to another eligible buyer.
First Homes has separate national and local criteria. Its eligibility
requirements should not be used to predict the rules for Your First
Home.
How could
Your First Home compare with a 95% mortgage?
The proposed scheme could reduce both the cash deposit and the
proportion funded through a mortgage. That does not prove it will cost
less over the full period of ownership.
Consideration
Your First Home, proposed
Standard 95% mortgage
Typical buyer cash deposit
Expected to be 2.5%
Commonly at least 5%
Mortgage proportion
Approximately 77.5%
95%
Additional government interest
Expected 20% equity loan
No separate government equity loan
Property choice
Expected to be participating new builds only
Existing and new-build homes, subject to lender criteria
Availability
Not yet open
Available now through participating lenders
Future cost
Equity-loan interest and repayment terms unknown
Mortgage interest, fees and repayments under the chosen product
The expected 2.5% deposit could reduce the savings barrier. A 77.5%
mortgage would also be smaller than a 95% mortgage on the same price,
which may help some buyers with limited borrowing capacity.
The government says users could save hundreds of pounds per month
compared with a 95% mortgage. That is not guaranteed: actual costs will
depend on mortgage rates, fees, equity-loan terms and individual
circumstances.
What costs and risks remain
unknown?
Before buyers can judge whether the scheme offers good value, the
government needs to confirm:
the length of the interest-free period;
the interest rate and any annual increases after that period;
any management or administration fees;
how full and partial repayments will be valued;
whether the repayment amount will rise or fall with the property’s value;
any restrictions affecting a sale, remortgage, letting or home improvements;
valuation and legal costs;
which lenders and developers will participate; and
how local price caps compare with the price of new-build homes in each area.
Buyers should also consider whether a new-build premium could affect
future value. We would compare the mortgage rate, equity-loan charges,
repayment basis, legal costs and likely time in the property, not the
deposit alone.
What can first-time
buyers do while waiting?
Work out a realistic monthly housing budget.
Review credit reports and correct any factual errors.
Continue saving for the deposit, purchase costs and an emergency buffer.
Avoid committing to a property on the assumption that the scheme will apply.
Compare what might be possible now with a 5% deposit against the potential benefit of waiting.
Decide whether a new build is genuinely the preferred property type.
Waiting may be reasonable for someone with only a 2.5% deposit who
strongly prefers a participating new build. Others may already be able
to buy with a 5% deposit or another route. Waiting can mean additional
rent and exposure to changing prices or mortgage rates.
Consider current savings, saving rate, affordability, preferred
property and area, likely price caps, readiness to buy, waiting costs
and the final equity-loan terms.
One of the first things we would want to understand is whether the
buyer is blocked by the deposit, by mortgage affordability, or by both.
An equity loan may help those two problems differently.
How Monday Mortgages can
help
Your First Home is not open, but Monday Mortgages can assess your
deposit, income and existing first-time
buyer mortgage options, then revisit the comparison when the
scheme’s rules and lenders are confirmed.
[FAQ]
Frequently asked questions
Is the Your First Home
scheme open yet?
No. Applications are not open. Costs and implementation dates are due
at the Budget on 28 October 2026.
How much
deposit will you need for Your First Home?
The government expects a 2.5% buyer deposit. Rules for larger
contributions and gifted deposits have not been published.
How much will the government
lend?
The announcement describes a 20% government-backed equity loan. Its
interest, valuation and repayment terms remain unknown.
Will Your
First Home only be available on new builds?
The proposal covers new builds from participating developers. There
is no official indication that resale properties will qualify.
What will the
income and property price limits be?
Both are confirmed in principle, but the figures have not been
announced.
Can
self-employed first-time buyers use Your First Home?
No scheme-specific exclusion has been published. A self-employed
buyer would still need to meet the final rules and a lender’s
income-evidence and affordability requirements.
Is Your First Home
the same as First Homes?
No. Your First Home is a proposed equity loan. First Homes is an
existing 30% to 50% discount scheme.
Is Your First Home
replacing Help to Buy?
It uses a similar equity-loan concept but is a separate proposal. It
should not be treated as a continuation unless the final rules retain
specific features.
As your buy-to-let mortgage deal approaches its end, you may be wondering whether to stay with your current lender or look elsewhere. Perhaps you’re also considering improvements to the property, releasing equity for another purchase or changing your borrowing to suit your longer-term plans.
Whatever prompts the review, it helps to understand what switching would mean for you. A lower advertised rate can look appealing, but fees, a fresh valuation and checks on your rental income can all affect which buy-to-let mortgages are available and whether moving lender is worthwhile.
In this guide, we’ll walk through when to start reviewing your deal, how a remortgage compares with a product transfer, and what lenders will assess. We’ll also explain the costs and equity-release options, with practical examples to help you judge your next step.
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What is a buy-to-let remortgage?
A buy-to-let remortgage replaces your existing mortgage with a new one secured against the same rental property, usually through a different lender.
You may change the rate, mortgage term or repayment basis, subject to criteria. You can also apply to borrow more or use savings to reduce the balance.
The basic process resembles how remortgaging works on a residential property, with additional attention to the rental position.
A product transfer means choosing another mortgage product with your existing lender. It may involve fewer checks, but it isn’t necessarily automatic or fee-free.
Why do landlords remortgage buy-to-let properties?
The existing deal is ending
Your mortgage will usually move onto the lender’s follow-on or reversionary rate when your fixed-rate mortgage ends unless you arrange something else. Check your offer for the rate that applies and when it starts.
To change the rate or product
You might want another fixed period for payment certainty, a different product type or more flexible overpayment and early repayment terms. Switching won’t necessarily reduce your monthly payment, particularly if your previous rate was lower than those now available.
To release equity
Additional borrowing could help fund repairs, improvements or a buy-to-let deposit on another property. The amount available depends on the lender’s assessment of the value, rent, proposed use of the money and your circumstances.
To restructure borrowing
You may want to change the term, repayment method or arrangements across several properties. Transferring a personally owned property into a company is different: it involves a change of ownership and can have legal and tax consequences.
When should you start reviewing your BTL mortgage?
Start reviewing several months before the current deal ends. The right timing depends on your early repayment charge, the new lender’s offer validity and the work needed to complete the application.
One of the first things we would check is when any early repayment charge reduces or ends. Beginning a review early doesn’t mean completing the switch early.
Check the deal-end date and charges, ask your lender about product-transfer options, then compare suitable alternatives. Allow time for underwriting, valuation and legal work, especially for company or portfolio cases. Coordinate completion to avoid unnecessary charges or time on the reversionary rate.
Product transfer or remortgage: which should you consider?
Your remortgage vs product transfer comparison should cover both the process and the overall cost.
Feature
Product transfer
Remortgage
Lender
Existing lender
Usually a different lender
Application
May be streamlined
Normally a new application
Rental assessment
Depends on lender and transaction
Fresh checks may apply
Valuation
May not be required
Commonly required
Legal work
Often limited
Usually required
Product choice
Existing lender’s range
Wider eligible market
Additional borrowing
May be available separately
Can potentially be included
Main consideration
Convenience and existing-lender pricing
Eligibility and switching costs
A simpler product transfer can still cost more over the deal period. Equally, a lower rate elsewhere may offer little benefit after fees. Keeping your existing deal until its charges expire is also a valid option.
What will a new BTL lender assess?
Buy-to-let mortgage criteria vary, but a lender may consider:
The current value, mortgage balance and requested loan.
Loan-to-value (LTV), meaning the mortgage as a percentage of the property’s value.
Rent, local rental demand, tenancy arrangements and property type.
Your credit history, landlord experience and personal income where required.
Other properties, mortgages and financial commitments.
The company structure, directors and shareholders, where applicable.
The purpose of any additional borrowing.
Before comparing rates, we would establish the borrowing you need and check the property, rent and existing mortgage. That helps identify realistic options before you commit to an application.
Will the rent be reassessed when you remortgage?
A new lender may reassess the rent using an interest coverage ratio (ICR): the rental income compared with the mortgage interest cost. It may calculate that cost using a stressed interest rate to test affordability at a higher rate.
The rent used may reflect a valuer’s market assessment, rather than solely your tenancy agreement. Required cover and stress rates vary with lender, product, tax position and ownership. Some lenders consider personal income to supplement rent, often called top-slicing.
The PRA’s underwriting standards exclude remortgages without additional borrowing from certain expectations, allowing specified fees to be disregarded. This doesn’t guarantee acceptance or remove lender checks.
Your previous mortgage approval therefore doesn’t establish what you can borrow today. Our buy-to-let mortgage calculator helps you explore rental cover, yield and LTV, but gives estimates rather than a lending decision.
How does the property valuation affect a BTL remortgage?
The new lender normally needs a current valuation to establish the LTV and may also assess market rent. Its figure can differ from your estimate or an estate agent’s appraisal.
For example, a £180,000 mortgage against an estimated £300,000 value gives a 60% LTV. If the lender values the property at £270,000, the LTV becomes approximately 66.7%.
That change could affect the products available or reduce additional borrowing. A higher valuation may improve the LTV, but doesn’t override rental-affordability requirements.
How much does it cost to remortgage a buy-to-let?
The cost of remortgaging can include an early repayment charge, product or arrangement fee, valuation, legal work, mortgage-advice fee and lender administration or exit charges. Company borrowing may involve additional legal costs.
Some products include valuation or legal-service incentives, subject to conditions. Check what these cover, particularly if your case needs specialist work.
Compare the rate, monthly payments, upfront and added fees, incentives and early repayment terms over the period you expect to keep the mortgage. A product fee added to the loan remains payable and may attract interest.
For illustration, saving £50 a month produces £1,200 over two years. If switching costs £2,000 more than the alternative, those payment savings alone wouldn’t cover the difference. This simplified comparison assumes the same borrowing and repayment basis.
Can you remortgage a buy-to-let to release equity?
Potentially, provided the requested mortgage meets the lender’s valuation, maximum LTV, rental-affordability and applicant requirements.
Consider this illustrative example:
Item
Amount
Property value
£300,000
Existing mortgage
£150,000
Existing LTV
50%
Proposed new mortgage
£210,000
New LTV
70%
Gross amount released before fees
£60,000
Although the property initially holds £150,000 of equity, that doesn’t mean all of it is available to withdraw. The proposed £210,000 mortgage must still pass the lender’s assessment, including whether the purpose of the extra borrowing is acceptable.
Borrowing more increases your secured debt and may increase interest costs. We would recommend checking that rent still leaves room for maintenance, tax and periods without a tenant.
The use of borrowed money can affect its tax treatment. HMRC’s guidance on rental income and expenses explains the distinction between capital repayments and finance costs. Ask a qualified tax adviser how the rules apply to your ownership and proposed use of the funds.
Can you remortgage a limited-company buy-to-let?
Yes, potentially. A limited company buy-to-let mortgage is in the company’s name, but lenders may also assess its directors and shareholders. Directors may need to provide personal guarantees.
Rent, value and LTV still matter. Newly formed and established companies can be treated differently, and an ordinary trading company may have different options from a property special purpose vehicle (SPV). Limited company buy-to-let rates and lender choice can also differ from personal borrowing.
Refinancing an existing company-owned property is distinct from moving personal property into a company. The latter needs separate legal and tax consideration.
What changes for portfolio landlords?
The PRA treats borrowers with four or more distinct mortgaged buy-to-let properties in aggregate as portfolio landlords and expects specialist underwriting. Its portfolio lending guidance explains this approach.
A portfolio landlord mortgage application may require a schedule of values, rents, mortgage balances and payments, plus assets, liabilities, cashflow, experience and a business plan. Lenders apply their criteria differently.
We would prepare the wider portfolio details early, even when only one mortgage is being replaced.
How does the BTL remortgage process work?
Review the current mortgage. Check the balance, rate, deal-end date, charges, remaining term, repayment basis and available product transfers.
Set the objective. Decide whether you need to replace an ending deal, control costs, change terms or release equity.
Gather property information. Bring together the estimated value, monthly rent, tenancy details, property type and relevant licensing information.
Compare eligible products. Assess existing-lender options against alternatives, allowing for fees and the intended deal period.
Apply. Provide the documents needed for checks on you, the property and, where relevant, the company or portfolio.
Complete valuation and legal work. The lender may use a physical, desktop or automated valuation. The conveyancer handles the legal requirements for replacing the mortgage.
Complete the switch. The new mortgage repays the existing lender. Any agreed additional funds are released through the lender’s and conveyancer’s process.
Timescales depend on underwriting, valuation, legal work and case complexity. Avoid committing released funds to another purchase before the financing and completion arrangements are confirmed.
When might remortgaging not be worthwhile?
Switching may offer little benefit if early repayment charges or fees outweigh the savings, particularly on a small mortgage balance. A competitive product transfer may be more suitable.
A lower valuation, insufficient rental cover or limited options for your property or company structure can also restrict a new application. If you expect to sell soon, consider whether a new deal’s early repayment terms suit that plan.
Extending the term can increase long-term interest costs, even if repayments fall. Increasing the balance adds debt. Waiting until charges expire or reducing the borrowing requested may make a later application more practical.
What we would check before recommending a route
We would ask about your current lender, balance, rate, deal-end date and early repayment charge, alongside the property’s value, rent, type and ownership.
We would also establish the requested loan, purpose of additional borrowing, company details where relevant, other rental properties, income, credit history and plans to keep or sell the property.
Before recommending a route, we would compare eligible products and the total cost over your intended borrowing period. Our buy-to-let mortgage advisers can help you assess whether to keep the current deal, arrange a product transfer or move lender.
[FAQ]
Frequently asked questions
How early can you remortgage a buy-to-let?
Start reviewing several months before the deal ends. Application and completion timing depend on early repayment charges, lender timescales and how long the new offer remains valid.
Can I remortgage a buy-to-let before the fixed rate ends?
Potentially, but an early repayment charge may apply. Compare that charge and other switching costs with the benefit of changing early.
Does a BTL lender check the rent again?
A new lender may check existing or expected market rent and apply its own calculation. Evidence can include a valuation or tenancy agreement.
Is a buy-to-let product transfer the same as remortgaging?
A product transfer changes your deal with the existing lender. A remortgage replaces the mortgage, usually by moving to another lender.
Can I release equity when remortgaging a rental property?
Potentially. The amount depends on the valuation, existing balance, maximum LTV, rental assessment and lender criteria, including the use of the money.
Do I need a solicitor for a BTL remortgage?
Moving lender normally involves a solicitor or conveyancer. Some products include a legal-service incentive, but its scope and conditions vary.
Can I remortgage a buy-to-let through a limited company?
Potentially, with checks on the company, people behind it, property and rent. Transferring personal ownership into a company is a separate transaction.
Can I remortgage if my rental property is empty?
Possibly. Lenders differ on vacant properties and may require evidence of expected market rent and arrangements for letting the property.
If you’re approaching Help to Buy after 5 years, you don’t suddenly have to repay your equity loan in full. The main change is that the interest-free period ends and you start paying interest from the beginning of year six.
The Help to Buy interest rate starts at 1.75% in year six, and you continue paying the £1 monthly management fee. Importantly, neither of these payments reduces the equity loan itself.
Help to Buy: Equity Loan is now closed to new applicants in England, but existing homeowners still need to manage and eventually repay their loans. Below, we’ll explain what actually changes after five years, how the interest works and the options you can consider.
First-time buyers researching the government’s newly announced equity-loan proposal can read our Your First Home scheme guide. Your First Home is a separate proposed scheme, not a continuation of the previous Help to Buy loan, and applications are not yet open.
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Do you have to repay Help to Buy after 5 years?
No. Reaching the end of the first five years doesn’t normally create an automatic deadline to repay your Help to Buy equity loan.
We tend to see people assume the fifth anniversary is a repayment deadline. In practice, it’s usually a change in cost, because this is when the interest-free period ends.
reach the end of the equity-loan term, which is normally 25 years
pay off your main repayment mortgage
sell the property
are required to repay it because of certain breaches of the scheme terms
You can also choose to make a part repayment or repay the equity loan in full earlier.
So, if you’re wondering what happens after 5 years with Help to Buy, the immediate change is usually the start of interest payments, not a demand for the whole equity loan.
What interest do you pay on Help to Buy after 5 years?
According to Homes England’s guidance on Help to Buy interest, interest becomes payable from the beginning of year six, starting at 1.75% per year.
If you haven’t previously made a part repayment, that rate is applied to the original amount of equity loan you borrowed. It isn’t calculated using your home’s current market value.
The annual interest is then divided into monthly payments. You’ll also continue paying the separate £1 monthly management fee.
Example of Help to Buy interest in year 6
Homes England uses the example of someone who originally bought a £200,000 home with a 20% equity loan:
Original equity loan: £40,000
Year-six interest rate: 1.75%
Annual interest: £700
Approximate monthly interest: £58.33
Monthly management fee: £1
That means the Help to Buy loan interest after 5 years would be around £58.33 per month in this example, before adding the £1 management fee.
This is only an illustration. Your own payment depends on your equity-loan amount and whether you’ve already made any part repayments.
Period
Help to Buy interest
Management fee
Equity loan
Years 1 to 5
No interest
£1 per month
Equity percentage remains
Year 6
1.75%
£1 per month
Interest doesn’t repay the equity loan
Year 7 onwards
Can increase annually under the relevant scheme rules
£1 per month
Equity percentage remains until repayment
Does your Help to Buy interest rate increase every year?
Yes. After Help to Buy year 6, the interest rate can increase each April.
Homes England uses different annual increase formulas depending on which version of the English Help to Buy: Equity Loan scheme you used.
Help to Buy: Equity Loan 2013 to 2021
For the earlier 2013 to 2021 scheme, the interest rate is increased each year using Retail Price Index (RPI) plus 1% under the scheme’s formula.
Help to Buy: Equity Loan 2021 to 2023
For the later 2021 to 2023 scheme, the rate is increased using Consumer Price Index (CPI) plus 2%.
These are annual increases to the existing interest rate rather than percentage points simply being added to it.
This means there isn’t one universal Help to Buy year 7 rate. It depends on which scheme applies to you and the relevant inflation figure used for that year’s calculation.
Homes England normally tells borrowers about their updated interest rate before the change is applied in April.
Does the interest reduce your Help to Buy loan?
No.
This is one of the most important things we’d want someone to understand when reviewing Help to Buy after 5 years.
Your Help to Buy interest is a charge for having the equity loan. The £1 monthly management fee is also a charge. Neither payment repays the equity loan itself.
That’s different from the capital element of a normal repayment mortgage payment.
For example, if your Help to Buy equity loan represents 20% of your property’s value and you simply continue paying the required interest and fees, that 20% equity share doesn’t gradually fall because you’ve paid interest.
If you make a formal part repayment, however, the outstanding equity percentage reduces. Your future Help to Buy interest payments will then also reduce because the amount on which interest is calculated becomes smaller.
Can the amount you owe Help to Buy still increase?
The important distinction is between interest and the Help to Buy redemption amount.
Your Help to Buy interest is calculated using the monetary equity-loan amount. Before any part repayment, that’s based on the amount originally advanced to you.
The amount needed to repay the equity loan is different. It is based on the percentage of your home that remains subject to the equity loan and the property’s relevant market value when you repay it.
For example:
Original purchase price: £200,000
Help to Buy equity loan: 20%
Original equity loan: £40,000
Property value when repaying: £250,000
Approximate full repayment: £50,000
If the property were worth less instead, the percentage-based repayment amount could also be lower.
So paying Help to Buy interest doesn’t freeze the amount you’ll eventually repay at the original cash amount.
When you formally repay the loan, Homes England requires a qualifying RICS market valuation to establish the property’s current value.
What are your options after the first 5 years?
There’s no single answer that’s appropriate for every homeowner. Broadly, you can continue with the equity loan, make a part repayment or repay it in full.
Keep the Help to Buy equity loan
You can continue with your existing Help to Buy arrangement, subject to its terms. If your mortgage deal is also ending, our guide to remortgaging while keeping your Help to Buy loan explains that route.
You’ll continue paying:
the applicable Help to Buy equity loan interest
the £1 monthly management fee
The outstanding equity share remains in place until you make a repayment.
We wouldn’t assume that keeping the equity loan is automatically the wrong option simply because the interest-free period has ended. Its cost needs to be considered alongside your mortgage, circumstances and future plans.
Repay part of the equity loan
You may be able to make a part repayment.
Under Homes England’s Help to Buy remortgage and repayment process, a part repayment must normally be at least 10% of your home’s current market value, and you cannot leave less than 5% outstanding.
Making a part repayment reduces the equity percentage you still owe and can also reduce the amount on which your future Help to Buy interest is calculated.
Repay it in full
You may choose to pay off your Help to Buy equity loan completely using:
your own savings or other available funds
proceeds when selling the property
additional mortgage borrowing through a remortgage
The right route depends on your circumstances and the costs involved.
If you’re considering additional mortgage borrowing, our remortgage calculator can help you estimate how changing the mortgage balance could affect your repayments. The figures are illustrative rather than an indication that a particular mortgage will be available.
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Can you remortgage after 5 years to pay off Help to Buy?
Potentially, yes.
A Help to Buy remortgage after 5 years can sometimes be used to increase your first-charge mortgage and use the extra borrowing to repay the equity loan.
That doesn’t mean the additional borrowing will automatically be available.
If someone wants to remortgage to pay off their Help to Buy equity loan, we’d usually want to establish the current mortgage balance, Help to Buy percentage, estimated property value, income and financial commitments before assuming a larger mortgage is realistic.
The resulting mortgage still has to meet the lender’s affordability assessment, loan-to-value limits, credit criteria and property requirements.
Lender rules also differ. Some lenders currently require the Help to Buy equity loan to be repaid completely when remortgaging to them, while others can consider certain part-repayment structures.
Before someone pays for the formal Help to Buy valuation, we’d normally want to sense-check whether the proposed borrowing appears affordable and whether the resulting LTV fits suitable lender criteria.
You can find more information about help with remortgaging and how lenders assess a new mortgage before starting the formal redemption process.
Is it cheaper to repay Help to Buy after 5 years?
There’s no universal answer.
We wouldn’t simply compare a 1.75% Help to Buy loan interest rate with a mortgage rate and assume whichever percentage is lower must be the cheaper option.
They’re structurally different types of borrowing.
When we’re reviewing Help to Buy after 5 years, we’d normally consider factors including:
your current and future Help to Buy interest
the £1 management fee
the equity percentage you still owe
your property’s current value
the estimated Help to Buy repayment amount
the amount of mortgage borrowing required
the mortgage interest rate
the remaining mortgage term
mortgage product and remortgage fees
legal and Help to Buy administration costs
the RICS valuation cost
any early repayment charge on your existing mortgage
how long you expect to keep the property
A lower monthly payment doesn’t automatically mean lower overall borrowing costs.
For example, increasing your mortgage and extending its term could make the monthly payment look more manageable while also meaning that interest is charged over a longer period.
We tend to look at the mortgage and Help to Buy position together rather than comparing two headline interest rates on their own.
What would we check before deciding whether to repay Help to Buy?
If we were reviewing your Help to Buy equity loan after 5 years, we’d normally want to establish:
which Help to Buy scheme you used
the original equity-loan amount and percentage
whether you’ve already made a part repayment
your current Help to Buy interest rate
your existing mortgage balance and rate
when your current mortgage deal ends
whether an early repayment charge applies
your approximate property value
your income and employment or self-employment position
your regular credit commitments
your credit history
your remaining mortgage term
your plans for the property
These figures give a much more useful picture than simply asking whether a 1.75% rate sounds cheap or expensive.
What if you cannot afford to repay Help to Buy yet?
Reaching year five doesn’t normally mean that you suddenly have to find the money to clear your entire equity loan.
You can generally continue with the equity loan subject to the scheme terms, while paying the applicable interest and £1 monthly management fee.
You can then review your position again later.
However, if you’re struggling to meet the Help to Buy interest or management-fee payments, Homes England’s current guidance says you should contact Help to Buy Customer Services as soon as possible rather than allowing unpaid amounts to build up.
Should you review your Help to Buy loan when year 5 ends?
The fifth anniversary can be a useful point to review your position because your costs are changing.
But the end of the interest-free period doesn’t, by itself, tell you whether you should keep, partially repay or fully repay your Help to Buy loan.
The main points to remember are:
Year five isn’t normally an automatic repayment deadline
Interest starts from year six
The interest doesn’t reduce your equity loan
Your property’s market value affects the eventual repayment amount
Keeping, partially repaying and fully repaying the loan have different financial consequences
Remortgaging may be one way to fund repayment if the borrowing meets affordability and lender criteria
If we were reviewing this with you, we’d compare your Help to Buy position with your current mortgage, property value, borrowing capacity and future plans before deciding whether changing anything makes sense.
Thinking about paying off Help to Buy?
If your Help to Buy interest-free period is ending, Monday Mortgages can help you review the numbers and understand whether keeping the equity loan, repaying some or all of it, or using a remortgage to repay Help to Buy could fit your circumstances.
[FAQ]
Frequently asked questions
What happens when Help to Buy reaches 5 years?
When Help to Buy reaches 5 years, the interest-free period ends. Interest becomes payable from the beginning of year six at an initial rate of 1.75%, and the £1 monthly management fee continues. You don’t automatically have to repay the whole equity loan simply because five years have passed.
What is the Help to Buy interest rate after 5 years?
The Help to Buy interest rate after 5 years starts at 1.75% in year six. From then on, it can increase each year. The 2013 to 2021 scheme uses an RPI plus 1% calculation, while the 2021 to 2023 scheme uses CPI plus 2%.
Does paying Help to Buy interest reduce the loan?
No. Help to Buy interest and the £1 monthly management fee are charges and don’t repay the equity loan. The outstanding equity percentage only reduces when you make an eligible part or full repayment.
Do I have to pay Help to Buy back after 5 years?
No, not simply because the five-year interest-free period has ended. Full repayment is normally required by the end of the equity-loan term, when you pay off your repayment mortgage, when you sell the property, or in certain other circumstances under the scheme terms.
Can I remortgage after 5 years to repay Help to Buy?
Potentially. You may be able to increase your mortgage to repay the equity loan, but the larger mortgage must meet the lender’s affordability, LTV, credit and property criteria. Lender rules on Help to Buy repayment also differ.
Does the amount I owe Help to Buy increase if my home goes up in value?
It can. The repayment amount is based on the outstanding equity percentage and your property’s relevant market value when you repay. If the property’s value rises, the cash amount required to repay the same percentage can rise. If its value falls, the repayment amount can also fall.
Can I repay part of my Help to Buy loan?
Potentially. Homes England currently allows part repayments of at least 10% of the property’s current market value, and you cannot leave less than 5% outstanding. A qualifying valuation and the formal Help to Buy repayment process are required.
Is it better to pay Help to Buy off or keep it?
There isn’t a universal answer. You need to compare the Help to Buy interest and equity share with the cost of any replacement mortgage borrowing, fees, mortgage term, property value and your future plans. Monthly payments alone don’t show the total cost.
Around 25% of the purchase price is a sensible starting point when planning a buy-to-let deposit. On a £250,000 property, that means contributing £62,500 and applying to borrow the remaining £187,500.
However, 25% isn’t a fixed requirement for every application. Some products may permit a smaller deposit, while the expected rent, property valuation and lender’s criteria could mean you need more. Your budget also needs to cover purchase costs and money for unexpected expenses.
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What is a typical buy-to-let deposit?
A 25% deposit is a common planning figure for buy-to-let, rather than a universal minimum. It means you fund a quarter of the property’s price and seek a mortgage for the remaining three-quarters.
Your deposit is only one part of how buy-to-let mortgages are assessed. The property, rental income, your circumstances and whether you buy personally or through a company can all affect the application.
The distinction matters: a product’s maximum loan-to-value tells you the smallest deposit it permits, but the lender’s rental assessment may mean you need to contribute more.
How do deposit and loan-to-value work?
Loan-to-value, usually shortened to LTV, is the mortgage expressed as a percentage of the property’s value. A 25% deposit produces a 75% LTV mortgage, assuming the lender accepts the purchase price as the value.
The basic relationship is:
Deposit percentage = 100% minus the mortgage LTV.
For a £250,000 property, the figures would look like this:
Deposit percentage
Cash deposit
Mortgage required
LTV
20%
£50,000
£200,000
80%
25%
£62,500
£187,500
75%
30%
£75,000
£175,000
70%
40%
£100,000
£150,000
60%
These examples show the calculation only. They don’t confirm that a product is available at each LTV or that the rent would support the mortgage. Purchase costs are additional.
If you already know the property value and mortgage amount, our loan-to-value calculator can help you check the percentage.
Can you get a buy-to-let mortgage with less than 25% deposit?
Potentially, depending on current product availability and your application. Higher-LTV options may sometimes allow a smaller deposit, but availability changes.
A smaller deposit means a larger mortgage. That can make the rental assessment harder to satisfy, even where you meet the product’s LTV limit. Rates, fees and eligibility requirements may also differ between LTV bands.
When we assess a lower-deposit application, we would check both whether a suitable product exists and whether the expected rent supports the larger loan. We would also compare the overall costs, rather than choosing a mortgage solely because it requires less cash upfront.
Why might you need a larger buy-to-let mortgage deposit?
Buy-to-let mortgage criteria vary. Circumstances that may reduce lender choice or the amount available include:
Expected rent that doesn’t support the requested mortgage.
A specialist property, such as a house in multiple occupation (HMO) or a building containing several rental units.
Construction or condition that falls outside standard property criteria.
Credit history that restricts the products available.
Being a first-time landlord or not already owning a home.
An ownership structure or loan amount outside a lender’s rules.
None automatically means a larger deposit is required. An HMO mortgage or a buy-to-let mortgage with adverse credit needs to be assessed against the relevant lender’s criteria. Extra cash won’t necessarily resolve an eligibility issue.
What if the valuation is lower than the purchase price?
Suppose you agree to pay £250,000 and plan to put down £62,500, borrowing £187,500. The lender then values the property at £240,000.
If its maximum loan is 75% of that lower valuation, the mortgage would be capped at £180,000, before any other restrictions. To proceed at the same purchase price, you would need £70,000 towards it, which is £7,500 more than planned.
We would recalculate the figures at that point. You may need to contribute more or renegotiate the purchase price.
How can rental income affect the deposit you need?
Lenders commonly assess rental affordability using an Interest Coverage Ratio, or ICR. This compares expected rent with a mortgage-interest amount calculated using a stress rate, which may differ from the rate you actually pay. The required ratio and stress rate vary between lenders, borrowers and products.
The PRA’s buy-to-let underwriting standards set expectations for lenders within their scope to use rental-cover testing, personal-income affordability testing, or both. Property costs and relevant tax liabilities also matter, and expected rent needs suitable verification, such as valuation or tenancy evidence.
Some lenders allow personal income to supplement rent, often called top-slicing. This involves further affordability checks and isn’t available in every case.
When a 25% BTL deposit becomes 30%
Consider this illustrative purchase:
Item
Amount
Purchase price
£250,000
Planned 25% deposit
£62,500
Mortgage requested
£187,500
Maximum loan supported by the rental assessment
£175,000
Deposit needed to cover the difference
£75,000
Deposit as a percentage of the price
30%
Here, the rent limits borrowing to £175,000, even if the product permits 75% LTV. The buyer would need another £12,500 to proceed at the same price with that mortgage. This is an example, not a universal lender calculation.
Our buy-to-let mortgage calculator can help you compare the deposit, loan amount, rental yield and rental cover. Its rental-cover figure uses the interest rate you enter, so it doesn’t confirm that the property passes a lender’s stress test or that you qualify for a mortgage.
Does a limited company need a different BTL deposit?
Not necessarily. Personal and limited-company mortgages can have different product ranges and criteria, but company ownership doesn’t automatically require a larger or smaller deposit.
The deposit is only one part of a limited company buy-to-let mortgage. Lenders may assess the company structure, directors, shareholders, property and rent. Creating a new special purpose vehicle, a company set up for a particular purpose such as holding rental property, doesn’t remove checks on the people behind it.
We wouldn’t suggest choosing an ownership structure solely because one mortgage appears to require less deposit. Mortgage costs and accounting implications need consideration alongside tax advice from a qualified adviser.
Where can a buy-to-let mortgage deposit come from?
Possible sources include savings, proceeds from a property sale, inheritance and gifted funds. A company purchase may use company funds or a director’s loan, subject to the lender’s requirements.
One of the first things we would want to understand is where the money comes from. An acceptable amount still needs an acceptable, properly evidenced source.
A gifted deposit for a buy-to-let mortgage must be disclosed. A non-repayable gift is different from a loan, and lenders may require confirmation of the donor’s relationship to you and whether they expect repayment or an interest in the property.
It may also be possible to release equity for a buy-to-let deposit through additional secured borrowing, including a buy-to-let remortgage on an existing rental property. That borrowing needs its own affordability and cost assessment. It increases your debt, and unsecured borrowing shouldn’t be assumed acceptable.
Company funds and director’s loans may also need accounting or tax advice.
What other costs should you budget for?
The deposit isn’t your total cash requirement. Stamp Duty on a buy-to-let property can be a substantial separate expense, with the amount depending on where the property is:
Mortgage product fees and any mortgage-advice fees.
Valuation, survey and conveyancing costs.
Company setup or accountancy costs, where relevant.
Insurance, licensing and safety work.
Repairs and preparing the property for tenants.
Periods without rental income and unexpected bills.
Get estimates for the property you’re considering. A single percentage allowance won’t account for differences in tax, condition and transaction costs.
Is a bigger buy-to-let deposit always better?
A larger deposit reduces the mortgage required. It may help the rental calculation, open different LTV bands and reduce interest costs. Having additional funds available can also help if a valuation comes back lower than expected.
However, putting more into the purchase leaves less for tax, fees, repairs and financial reserves. Moving to a lower LTV doesn’t necessarily produce a proportionate improvement in mortgage terms.
We would compare the products available at different deposit levels alongside the money you would retain. A deposit that uses every available pound could leave you struggling to cover an empty month or an urgent repair.
How to estimate the deposit you may need
Confirm the expected purchase price.
Calculate 25% as an initial planning figure.
Subtract it from the price to find the mortgage required and check the LTV.
Check whether the property or ownership structure could restrict lender choice.
Budget separately for tax, fees, property work and reserves.
Check current lender criteria before making a financial commitment.
This gives you a starting budget. It doesn’t replace a lender’s assessment or a mortgage recommendation.
What we would check before recommending a mortgage
At Monday Mortgages, we would check the purchase price, estimated value, deposit amount and source, mortgage required and expected monthly rent together.
We would also consider the property type, intended tenants, ownership structure, landlord experience and any existing portfolio. Your income, employment, credit history, other borrowing and remaining cash reserves may affect which options are suitable.
If you already have a purchase price, deposit and expected rent, our buy-to-let mortgage advisers can assess how those figures work together and identify options based on the wider application.
[FAQ]
Frequently asked questions
What is the minimum deposit for a buy-to-let mortgage?
Around 25% is a common planning figure, but there isn’t one minimum across all lenders and products. Some may permit less, while the property, rent or your circumstances may mean you need more.
Can I get a buy-to-let mortgage with a 20% deposit?
Potentially, if a suitable 80% LTV product is available when you apply. You would still need to satisfy the rental assessment, property requirements and wider eligibility criteria.
How much deposit do I need for a £200,000 buy-to-let?
A 25% deposit would be £50,000, leaving a £150,000 mortgage at 75% LTV. That’s an illustration: the lender’s valuation and rental-affordability assessment could change the amount available.
Does a limited company need a bigger BTL deposit?
Not necessarily. Company and personal buy-to-let products can have different requirements, but there isn’t a universal company deposit percentage. The lender assesses the company, people involved, property and rent.
Can I use equity from another property as my deposit?
Potentially, by selling it or borrowing against it. Further borrowing depends on the existing mortgage terms, affordability and lender criteria. Check the costs and total secured debt before proceeding.
Can a buy-to-let mortgage deposit be gifted?
Some lenders accept gifted funds, subject to their criteria and source-of-funds checks. The gift must be disclosed, and the lender may require confirmation that it isn’t repayable.
Do first-time landlords need a larger deposit?
Not automatically. A first-time landlord mortgage may involve a more restricted lender choice, particularly if you don’t already own a home. The deposit requirement depends on the product and application.
Is a 25% deposit enough if the rent is low?
Not necessarily. It may meet the product’s LTV limit while the rent supports a smaller loan. You may need a larger deposit or a lower purchase price for that mortgage to work.
You do not necessarily have to repay your Help to Buy equity loan when your mortgage deal ends. You may be able to remortgage with Help to Buy still in place if the mortgage balance does not increase and the lender accepts the second charge. Affordability, credit history, the property and lender criteria also matter.
The process differs depending on whether you stay with your lender or move. Staying may require fewer steps. Moving requires Homes England’s permission and a Deed of Postponement so the new mortgage keeps the first charge. This guide covers Help to Buy: Equity Loan in England.
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Can you keep your Help to Buy loan when you remortgage?
Potentially, yes. The Help to Buy equity loan can remain as a second charge while the first mortgage changes, but the mortgage lender must accept that arrangement.
Under Homes England’s route for remortgaging without borrowing more, the new mortgage balance should not increase, apart from permitted lender charges. The £1 monthly management fee, any interest due and the outstanding equity percentage continue. Fees and interest do not reduce the equity loan.
We would first establish whether you need a new deal or also want extra money, because that changes the Homes England process and suitable lenders.
Do you have to repay Help to Buy when your mortgage deal ends?
No, not solely because a fixed, tracker or discounted mortgage deal has ended. The mortgage deal and the Help to Buy equity loan are separate borrowing arrangements.
The end of your mortgage deal may move you onto the lender’s standard variable rate. Separately, the end of the five-year Help to Buy interest-free period means interest starts to become payable. It is not an automatic repayment deadline.
Help to Buy: Equity Loan is closed to new applicants in England, but existing loans continue.
What is the difference between staying and changing lender?
Route
Homes England application
Deed of Postponement
Main consideration
Stay with your current lender without borrowing more
Homes England says you do not need to contact it or apply
Check whether your lender requires one
Product availability and lender-specific checks
Move to a new lender without borrowing more
Permission is required
Required so the new mortgage remains the first charge
The new lender must accept Help to Buy remaining
Borrow more
A separate permission process applies
May be required
Additional borrowing is restricted to specified purposes
A rate switch or product transfer can be operationally simpler than a legal remortgage, but the terms are not interchangeable and lender requirements vary.
Can you stay with your current lender?
Yes, potentially. Homes England’s remortgaging guidance says that if you remain with your current lender and do not borrow more, you do not need to contact Homes England or apply for permission. You should still ask the lender whether it requires a Deed of Postponement.
The lender’s rules apply, and some changes may trigger affordability checks. We would compare the rate, fees, early repayment charge and overall cost with realistic new-lender options rather than assume staying is best.
Can you change mortgage lender and keep Help to Buy?
Potentially, if the new lender accepts the equity loan remaining as a second charge. Homes England’s permission is required before you change lender under the no-additional-borrowing route.
You will normally need a mortgage offer, a redemption statement, a breakdown of lender charges and your conveyancer’s details. Homes England says the statement must be less than 12 working days old. Check with its Customer Service team if lender charges exceed £2,000.
Help to Buy arrears must be cleared or covered by an agreed payment plan. The administration fee is currently £115, and an Authority to Proceed lasts six months. Specialist remortgage advice can help identify realistic routes before you apply.
What is a Deed of Postponement?
A Deed of Postponement is a legal agreement confirming that the new repayment mortgage keeps the first charge while Help to Buy remains the second. It does not repay Help to Buy. Your conveyancer handles it.
How does the process work when you move lender?
Confirm that no extra borrowing is requested. Compare the current redemption figure with the proposed new loan.
Find a lender that accepts the remaining equity loan.
Obtain the mortgage offer, redemption statement and fee breakdown.
Instruct a conveyancer. Homes England requires their details.
Apply to Homes England and pay the fee. Address any arrears first.
Receive the Authority to Proceed. It is currently valid for six months.
Complete the legal work. The conveyancer handles the Deed of Postponement and completion notification.
The official no-additional-borrowing checklist does not currently list a Help to Buy-compliant RICS valuation. The mortgage lender may still arrange its own valuation.
Can you borrow more and keep Help to Buy?
This follows a separate process. Additional borrowing requires Homes England’s permission and is limited to specified purposes, including repaying the equity loan, approved structural alterations and funding a transfer of equity. Some arrears cases may be considered individually.
Unrestricted equity release should not be assumed to qualify, and additional borrowing is not allowed in negative equity. If you want to increase the mortgage and remove the equity loan, read about remortgaging to pay off your Help to Buy loan.
Will keeping Help to Buy restrict your mortgage options?
It can. Some lenders consider it, while others require repayment of the equity loan. LTV, term, repayment and property rules differ. Help to Buy interest may affect affordability alongside the usual income, credit and property checks.
We would check policy before rates because an affordable-looking case can still fail a lender’s shared-equity criteria.
What happens to your Help to Buy payments?
Remortgaging does not reset the equity loan or its interest-free period. The £1 monthly management fee and any interest due continue, but neither reduces the equity loan. The outstanding percentage remains linked to the property’s relevant market value when eventually repaid.
What will a mortgage lender check?
We would check the redemption figure, deal-end date, early repayment charge, proposed loan, Help to Buy percentage and interest, property value and LTV, income, credit commitments, property type and future plans.
We would want to separate a straightforward lender switch from any request to change ownership, increase the mortgage balance or alter the property. Those changes can move the case into a different Homes England process.
Is it better to keep Help to Buy or repay it?
There is no universal answer. Compare the mortgage rate and fees, early repayment charge, Help to Buy costs, equity percentage, property value, mortgage term, legal costs and likely time in the property.
Keeping Help to Buy may avoid increasing the first mortgage today, but the equity percentage remains. Repaying it removes that interest but can substantially increase the mortgage. Compare this with using a remortgage to repay Help to Buy.
What if you cannot switch to a new lender?
Possible reasons include lender policy, affordability, credit history, LTV, property concerns, arrears or additional borrowing. You could investigate a product transfer, address arrears or incorrect information, review the mortgage later, or consider Help to Buy repayment where affordable and permitted. None is guaranteed.
What should you check before remortgaging with Help to Buy?
Are you staying with your lender or moving?
Is the mortgage balance increasing?
Does the lender accept Help to Buy remaining?
Is Homes England permission required?
Is a Deed of Postponement required?
Are your Help to Buy payments up to date?
What fees and early repayment charges apply?
Does the new mortgage work on affordability and LTV?
How does keeping the equity loan compare with repaying it?
We would identify the correct Homes England route, then check which lenders accept the remaining equity loan. This avoids comparing unavailable products.
Need to remortgage while keeping Help to Buy?
Monday Mortgages can assess staying or moving and check which lenders accept the equity loan remaining. Compare your remortgage options.
[FAQ]
Frequently asked questions
Can I remortgage without paying off my Help to Buy loan?
Potentially. The lender must accept the remaining equity loan, and moving lender requires Homes England’s permission.
Do I need Homes England’s permission to remortgage?
Not if you stay with your current lender without borrowing more. You need permission if you move. Your lender may still require a Deed of Postponement.
What is a Help to Buy Deed of Postponement?
It is a legal agreement that preserves the new mortgage lender’s first-charge priority while Homes England’s equity loan remains the second charge.
Can I switch mortgage products with my current lender?
Potentially. Homes England does not require an application if you stay with the same lender without borrowing more, but the lender’s rules apply and it may require a Deed of Postponement.
Can I change lender and keep Help to Buy?
Potentially, if the new lender accepts the structure, the mortgage is otherwise affordable and suitable, and Homes England grants permission.
Can I borrow extra money without repaying Help to Buy?
Only for purposes accepted under Homes England’s separate additional-borrowing process. You should not assume unrestricted equity release is permitted.
Do I need a RICS valuation to remortgage and keep Help to Buy?
The current no-additional-borrowing process does not list a Help to Buy-compliant RICS valuation, although the lender may arrange its own. Repayment and additional-borrowing routes have different requirements.
Does remortgaging stop Help to Buy interest?
No. The £1 management fee and any interest due continue while the equity loan remains outstanding.
A limited company can potentially take out a mortgage to buy a rental property. The company becomes the borrower and normally owns the property, but lenders may still assess the directors and shareholders behind it.
Limited company buy-to-let borrowing can differ from buying personally. Lenders may have requirements around the company structure, expected rent, deposit, property and the applicants involved. The available products and costs can differ too.
From a mortgage point of view, we wouldn’t assume that incorporating automatically gives you a better mortgage. The ownership structure also has tax and accounting implications, so it’s important to consider those separately with a qualified accountant or tax adviser.
If you’re considering buy-to-let mortgages, this guide explains how company applications work, what lenders may assess and what to check before committing to a property.
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What is a limited company buy-to-let mortgage?
A limited company buy-to-let mortgage is a loan taken out by a company to purchase or refinance a property that will be rented to tenants.
In a typical arrangement:
The limited company is the mortgage borrower.
The company purchases and owns the property.
The mortgage is secured against that property.
Rent is paid to the company.
The company makes the mortgage payments.
Directors or shareholders may provide personal guarantees.
Although the mortgage is in the company’s name, lenders don’t necessarily assess the company in isolation. They may also look at the directors, shareholders and anyone providing a guarantee.
Some investors use a special purpose vehicle, usually shortened to SPV. An SPV is a limited company created for a specific purpose, such as owning and letting property. Some lenders accept only certain company activities or structures, while others have broader criteria.
An SPV buy-to-let mortgage isn’t the only possible route. Whether you can use a new SPV, an established property company or an existing trading business depends on the lender.
Can a limited company get a buy-to-let mortgage?
Yes, subject to the lender’s criteria.
The mortgage market includes lenders that accept limited companies, including newly formed SPVs. However, each lender can set its own requirements for the company, the people behind it and the proposed investment.
A lender may consider:
The company’s structure and registered activities
Its directors and shareholders
The personal credit histories of the applicants
Existing personal and business borrowing
Previous landlord experience, where required
The property type and condition
The expected monthly rent
The requested loan-to-value
The source of the deposit
The lender’s rental affordability calculation
Whether personal guarantees will be provided
From a mortgage point of view, we’d look at both the company and the people behind it. Setting up a new company doesn’t mean the lender ignores your personal circumstances.
A new SPV may not need the same trading history as an ordinary operating business. However, this doesn’t make every newly incorporated company acceptable to every lender. The company’s ownership, activities and directors can still affect the buy-to-let mortgage options available.
How much deposit does a limited company need for buy-to-let?
Buy-to-let mortgages usually require a larger deposit than standard residential mortgages. Many products are available at loan-to-values of around 75%, which would mean providing a 25% deposit, but this isn’t a universal minimum.
Some lenders may accept a smaller deposit, while others may require more because of the property, applicant, company structure or wider circumstances.
For example:
Purchase details
Amount
Property price
£250,000
Deposit at 25%
£62,500
Mortgage required
£187,500
Loan-to-value
75%
Loan-to-value, or LTV, is the mortgage amount expressed as a percentage of the property’s value. In this example, borrowing £187,500 against a £250,000 property produces an LTV of 75%.
The size of your buy-to-let deposit affects the LTV and can influence which products are available. Our guide to buy-to-let deposit requirements explains the relationship between the deposit, mortgage and property value in more detail.
Having enough deposit doesn’t necessarily mean you can borrow the remaining amount. The expected rent must also satisfy the lender’s affordability calculation.
When we’re looking at a limited company BTL case, we’d check the deposit and its source alongside the rent and requested loan. That helps identify potential issues before an application is submitted.
How do lenders work out how much a limited company can borrow?
Buy-to-let affordability is usually based heavily on the property’s expected rental income. It isn’t simply calculated as a multiple of the directors’ salaries.
Lenders commonly use an Interest Coverage Ratio, or ICR, to assess whether the rent provides sufficient coverage for the mortgage interest. They may test the mortgage using an assumed interest rate rather than the actual initial rate offered.
The exact calculation varies between lenders. It can also depend on factors such as:
The mortgage product
Whether the mortgage is fixed or variable
The applicant’s tax position
The company structure
The property type
Whether personal income is being considered
The Bank of England’s current buy-to-let underwriting standards expect relevant lenders to assess affordability using an ICR test and/or a personal-income affordability test where appropriate. They should also consider costs associated with the property rather than relying on its equity or possible future price growth.
Some lenders offer a form of top slicing, where personal income may be considered if the rent doesn’t fully support the requested mortgage. This isn’t available in every case, and the lender will normally want to assess whether the applicant’s personal finances can support the shortfall.
If someone came to us with a £250,000 property and expected rent of £1,400 a month, we wouldn’t look at the purchase price alone. We’d check how the rent performs under the lender’s own BTL stress test and whether it supports the loan they’re asking for.
You can use our buy-to-let mortgage calculator to estimate rental yield, cash flow and rental cover before looking at individual lender criteria. The result is an estimate rather than a mortgage offer because each lender can use a different calculation.
Do you need an SPV for a limited company BTL mortgage?
Not necessarily. An SPV is one form of limited company, but the two terms aren’t interchangeable.
The important distinction is usually between a company established specifically to hold property and a business that carries out other commercial activities.
New SPV
A new SPV is created specifically to own and let property. It may have little or no trading history when the mortgage application is made.
Some lenders are comfortable with newly formed SPVs, provided the company’s structure, registered activities, directors and shareholders meet their criteria.
Existing trading company
An existing trading company is already carrying out another type of business. For example, it may provide professional services, operate a shop or run a construction business.
Using that company to purchase a rental property can be a different lending proposition. Some lenders don’t accept trading companies for buy-to-let borrowing, while others may consider them subject to further assessment.
Before researching lenders, we’d want to establish which structure is being used and what the company currently does. We wouldn’t recommend creating or restructuring a company solely because a general article suggests that an SPV is preferable.
The company should also make sense from a legal, accounting and tax perspective.
Do lenders check the company directors?
Yes. A limited company may be the named borrower, but lenders commonly assess its directors and, in some cases, shareholders.
Depending on the lender, the checks may include:
Personal credit history
Age
Residential status
Personal income
Existing mortgages and other borrowing
Previous landlord experience
Other directorships
Shareholding in the borrowing company
Ownership of other buy-to-let properties
Directors may also be asked to give personal guarantees. This can make them personally responsible if the company doesn’t meet its mortgage obligations, subject to the wording and enforceability of the guarantee.
The people who need to be included in an application can vary according to the company’s ownership. A lender might accept a simple structure with two directors differently from a company involving several shareholders, another company as a shareholder or a more complicated group arrangement.
This is why limited company buy-to-let mortgage criteria should be checked against the actual company rather than assumed from a headline product description.
Are limited company buy-to-let mortgage rates higher?
Limited company buy-to-let mortgage rates can differ from those available to landlords borrowing personally. The range of lenders and products can differ as well.
However, the interest rate alone doesn’t show the full cost of a mortgage. When comparing options, we’d also look at:
Product fees
Valuation fees
Legal costs
Any separate lender or application fees
The mortgage term
Early repayment charges
Whether fees are added to the loan
The total cost during the initial product period
A product with the lowest advertised rate could be more expensive overall if it has a large fee. The effect can be particularly noticeable on a smaller mortgage, where the fee represents a larger proportion of the amount borrowed.
The appropriate comparison also depends on what you expect to do with the property. A landlord planning to hold it for many years may assess the options differently from someone expecting to sell or refinance relatively soon.
Limited company vs personal buy-to-let
There isn’t a universally better ownership structure. The mortgage, tax treatment, administration and investor’s longer-term plans all need to be considered.
Consideration
Personal ownership
Limited company
Mortgage borrower
The individual
The company
Mortgage availability
Broad buy-to-let market
Specific company and SPV products
Underwriting
Individual, property and rent
Company, directors, property and rent
Taxation
Personal property-income rules
Company taxation rules
Administration
Generally simpler
Company accounts and administration required
Rental profits
Belong to the individual
Belong to the company
Taking money personally
Already received personally
Must be extracted from the company appropriately
Best option
Depends on the circumstances
Depends on the circumstances
HMRC states that rental income from property owned by a company is counted as business income. It also confirms that UK resident companies aren’t affected by the residential property finance-cost restriction that applies to individual Income Tax payers.
That doesn’t mean buying through a company will automatically leave you better off. Corporation Tax, extracting money from the company, accountancy costs, Stamp Duty Land Tax and the eventual sale of the property can all affect the outcome.
The choice between buy-to-let in a limited company or personal name should therefore be considered with a qualified tax adviser. A mortgage adviser can assess whether each route is workable from a borrowing perspective, but that’s only one part of the decision.
What are the tax implications?
Rental profits earned by a company are generally taxed within the company rather than under the landlord’s personal property-income calculation. Companies pay Corporation Tax on their taxable profits, including relevant property or investment profits.
Finance-cost treatment also differs. HMRC’s rental-income guidance explains that UK resident and non-UK resident companies aren’t affected by the residential finance-cost restriction applied to individual landlords.
Other issues may include:
Corporation Tax
Tax when money is withdrawn from the company
Stamp Duty Land Tax
Tax on a future sale
Accountancy and company administration costs
The treatment of losses and allowable expenses
Monday Mortgages provides mortgage advice rather than tax advice. Before deciding whether to buy personally or through a company, we’d recommend discussing the ownership structure with a qualified accountant or tax adviser.
Can you transfer an existing buy-to-let property into a limited company?
Potentially, but transferring a buy-to-let property to a limited company isn’t simply an administrative change of name.
The company is a separate legal entity. Moving a personally owned property into it can amount to a transfer of ownership and may involve:
Redeeming or replacing the existing mortgage
A new mortgage application in the company’s name
Conveyancing
A new property valuation
Stamp Duty Land Tax
Capital Gains Tax considerations
Other legal and accountancy work
An existing personal mortgage generally can’t just be renamed as a company mortgage.
Before proceeding, we’d want to check whether a suitable company mortgage is available and how much it could support. A solicitor and tax adviser should assess the legal and tax consequences separately.
Can you remortgage a limited company buy-to-let?
Yes, potentially. A limited company may be able to remortgage when an existing deal ends, move to another lender or release equity from a property.
A buy-to-let remortgage is likely to involve a fresh assessment. The lender may review:
The current property value
The achievable rent
The outstanding mortgage
The requested new loan
The company structure
The directors and shareholders
The wider property portfolio
Personal or business credit commitments
The amount originally borrowed isn’t necessarily the amount another lender will agree to refinance. Changes to the property value, rent, interest-rate stress test or lender criteria can all affect the result.
Any early repayment charges, arrangement fees, valuation costs and legal costs should be included when assessing whether switching is worthwhile.
Is a limited company BTL mortgage right for you?
The answer depends on both the mortgage and your wider financial plans.
Mortgage considerations
From a mortgage perspective, we’d look at:
The available deposit
The expected rent
The amount you need to borrow
The company structure
The property type
Your landlord experience
The available lender options
Product rates and fees
Plans for future property purchases
Wider financial considerations
You should also consider:
Personal and company taxation
Accountancy and administration
How rental profits will be used
How money will be withdrawn from the company
Future investment plans
The eventual sale or transfer of the property
We’d assess whether the company structure works from a mortgage point of view, but we wouldn’t tell someone to incorporate purely for a perceived tax advantage. The ownership decision needs to make sense alongside independent tax and legal advice.
What we’d want to know before looking for a lender
Before comparing lenders, we’d first establish the company structure, deposit, expected rent and required loan. That normally tells us far more than simply searching for the lowest advertised limited company BTL rate.
We’d usually want to know:
Whether you’re buying through a new or existing company
The company number, if it has already been incorporated
What the company currently does
Who the directors and shareholders are
The property purchase price
How much deposit you have
Where the deposit is coming from
The expected monthly rent
The mortgage amount required
Whether the property is a standard rental, HMO or another specialist type
Whether you already own rental properties
Your personal income and employment position
Your credit history
Whether you’re a first-time landlord
Your plans for the property and wider portfolio
If you’ve already found a property, we’d want to check whether the expected rent supports the borrowing before you commit significant money to the purchase.
Once those details are clear, we can compare suitable lender criteria, rental calculations and overall mortgage costs.
[FAQ]
Frequently asked questions
Can a new limited company get a buy-to-let mortgage?
Potentially, yes. Some lenders accept newly formed SPVs without an established trading history. They may still assess the company structure, directors, shareholders, property, rent, deposit and requested mortgage.
Do I need to own a home before getting a limited company BTL mortgage?
Not in every case. Some lenders require applicants or directors to own their own home, while others may consider non-homeowners. The available options depend on the wider application.
Can a first-time landlord use a limited company?
Potentially. Some lenders accept a first-time landlord mortgage through a limited company, while others require previous letting or property ownership experience. First-time landlords may therefore have a narrower lender choice.
How much deposit does a limited company need for buy-to-let?
A deposit of around 25% is common in the buy-to-let market, but it isn’t a universal requirement. The minimum can vary according to the lender, property, company, rental calculation and applicants.
Is an SPV the same as a limited company?
An SPV is a type of limited company established for a specific purpose. In this context, that purpose is normally holding and letting property. Not every limited company is an SPV because many companies carry out other trading activities.
Can I use my existing business to buy a rental property?
Possibly, but lender criteria for a trading company can differ from those for a property SPV. You should check the mortgage options and obtain tax and accounting advice before using an existing business to purchase property.
Are limited company buy-to-let mortgages regulated by the FCA?
The position depends on the transaction. Many business buy-to-let arrangements aren’t regulated in the same way as residential mortgages, while consumer buy-to-let business is covered by a separate framework. The FCA Handbook explains the distinction between buy-to-let and consumer buy-to-let lending. A mortgage adviser can confirm how the proposed arrangement is treated.
If you bought your council home through Right to Buy, you may now have a significant amount of equity in the property, particularly if you received a large discount or your home has increased in value since you bought it. It’s natural to wonder whether you can use some of that to release equity, perhaps for home improvements, to repay other borrowing or for another major expense.
The answer is potentially yes, but releasing equity from a Right-to-Buy property isn’t always as straightforward as looking at the difference between your mortgage balance and the property’s current value. This is particularly important during the first five years after purchase, while the Right-to-Buy discount repayment rules still apply.
In this guide, we’ll explain how equity works after a Right-to-Buy purchase, the difference between simply remortgaging and borrowing more, how the five-year discount period can affect your options, and what lenders are likely to consider if you want to raise additional money. We’ll also explain why the equity shown on paper isn’t necessarily the amount you’ll be able to access.
[TOC]
Can you release equity from a Right-to-Buy property?
Potentially, yes. In this context, releasing equity means increasing borrowing secured against your home and taking some of the difference as cash.
You might do this through a further advance from your existing lender or by moving to a new lender and increasing the mortgage balance. By contrast, a remortgage can simply mean moving lender without borrowing extra.
When we look at a Right-to-Buy remortgage involving additional borrowing, we don’t base the assessment on the headline equity figure alone. We also look at the current mortgage balance, property value, affordability, lender criteria, the reason for borrowing and whether any restrictions or charges could affect the proposed mortgage.
Why you can have equity from the day you buy
Suppose your council home is worth £200,000, but you buy it for £150,000 after a £50,000 Right-to-Buy discount.
Amount
Market value
£200,000
Purchase price
£150,000
Mortgage
£150,000
Apparent equity
£50,000
The Right-to-Buy discount has created a £50,000 gap between the mortgage and market value. However, that doesn’t mean you could automatically remortgage to £180,000 and withdraw £30,000. During the first five years, the discount repayment rules still matter.
What happens to your Right-to-Buy discount during the first five years?
If you sell a Right-to-Buy home within five years of purchase, some or all of the discount will usually have to be repaid. Under the current rules:
When you sell
Discount repayment percentage
First year
100%
Second year
80%
Third year
60%
Fourth year
40%
Fifth year
20%
After five years
No normal Right-to-Buy discount repayment
The amount repayable can also reflect the property’s value when it is sold. GOV.UK’s April 2026 Right to Buy guidance confirms both the five-year repayment period and the reducing repayment percentages above.
Importantly, this is a sale rule. It does not show how much equity becomes available to borrow each year.
Does 20% of the equity become available each year?
No. This is one of the main points we’d want to clarify before assessing a case.
The 20% annual reduction relates to the potential discount repayment liability. It is not an automatic borrowing allowance.
Whether you can borrow more depends on the lender, affordability, current property value, existing mortgage balance and the purpose of the borrowing. During the discount repayment period, the former landlord can also retain an interest connected with repayment of the discount, so the priority of mortgage charges can matter.
Depending on the property and proposed borrowing, your lender or conveyancer may need information or agreement from the former landlord. Some social landlords specifically use a Deed of Postponement where a lender needs new or additional borrowing to rank ahead of the landlord’s claim. We therefore wouldn’t recommend relying on a simple “market value minus mortgage” calculation during the first five years.
Remortgaging vs borrowing more: what’s the difference?
Option
What it means
Product transfer
Staying with your existing lender but changing deal
Remortgage
Moving your mortgage to another lender
Further advance
Borrowing extra from your existing lender
Remortgage with additional borrowing
Moving lender and increasing the mortgage balance
Releasing equity
Using extra secured borrowing to access some property value
What might lenders look at if you want to borrow more?
Having equity is only one part of the assessment. We’d normally expect a lender to consider:
current property value and mortgage balance;
the new loan-to-value;
income, expenditure and affordability;
credit history and existing commitments;
the purpose of the additional borrowing;
property type and suitability;
time since the Right-to-Buy purchase; and
any restrictions or charges affecting the property.
What happens after five years?
Once the standard five-year discount repayment period has ended, that particular complication falls away. Normal lender criteria still apply, including affordability, credit history, property suitability and loan-to-value.
The five-year rule is separate from the ten-year Right-to-Buy right-of-first-refusal rule. If you sell within ten years, you generally need to offer the property back to your former landlord or another social landlord first. Our guide to how Right to Buy works explains the wider scheme rules.
When should you speak to a mortgage broker?
Advice can be useful if you want to change lender, borrow more for home improvements, consolidate borrowing or understand whether waiting until after the five-year period could affect your options.
If you bought through Right to Buy and want to remortgage your home, we can review your equity, affordability and lender criteria and explain which mortgage routes may be realistic.
Where the answer depends on the legal terms of the original sale or the priority of charges, we may also recommend confirming the position with your former landlord or conveyancer. That way, we can assess the mortgage options without making assumptions about equity that may not actually be available to access.
[FAQ]
Frequently asked questions
Can I remortgage a Right-to-Buy property?
Potentially. Moving lender and borrowing extra are separate questions, so being able to remortgage does not necessarily mean you can also release additional equity.
Can I borrow more on my Right-to-Buy mortgage?
Possibly, through a further advance or a remortgage with additional borrowing. The amount available depends on lender criteria, affordability, LTV and any restrictions affecting the property.
Can I release equity within five years of Right to Buy?
It may be possible, but the discount repayment period can make additional borrowing more complex. We’d recommend checking both the mortgage and legal position rather than assuming the equity created by the original discount is freely available.
Does 20% of my Right-to-Buy equity become available each year?
No. The 20% annual reduction relates to the discount repayment liability, not an automatic allowance for additional borrowing.
Can I remortgage after five years?
Yes, subject to normal lender criteria. After five years, the standard Right-to-Buy discount repayment requirement no longer applies.
Being self-employed doesn’t stop you from getting a self-employed Right-to-Buy mortgage. The main question is whether a lender can verify your self-employed income, confirm the mortgage is affordable and accept the property you’re buying.
Your council or landlord decides whether you’re eligible for Right to Buy and confirms your Right-to-Buy discount. The mortgage is assessed separately by the lender.
In our experience, the important part isn’t simply whether you’re “self-employed”. It’s how you earn your income, how long you’ve been trading and whether the figures give a lender a clear picture of what you can afford.
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Can you get a Right-to-Buy mortgage if you’re self-employed?
Yes, potentially. A self-employed Right-to-Buy mortgage is still a normal residential mortgage, but the lender may need more evidence to understand your income.
This can apply if you’re a:
Sole trader
Limited company director
Contractor
Freelancer
Partner in a business
Being self-employed isn’t automatically a problem. What matters is whether your income can be evidenced, the mortgage is affordable and the rest of the application fits the lender’s criteria.
When we assess a case, we’d normally want to understand your business structure and income before looking at lenders. That’s because the same earnings can be treated differently depending on whether you’re a sole trader, company director or contractor, which is why the lender choice can matter when getting a mortgage when self-employed.
Right to Buy eligibility is separate from mortgage approval
Right to Buy is a way of purchasing an eligible council home at a discount. It isn’t a separate mortgage product.
Your council or landlord deals with the Right to Buy side of the purchase, including confirming your eligibility, valuation, discount and purchase price.
The mortgage lender considers:
Your income
Whether that income is sustainable
Your credit history
Existing financial commitments
How much you need to borrow
Whether the property is acceptable security
So, being eligible for Right to Buy doesn’t guarantee mortgage approval.
We’d generally recommend looking at the mortgage side before assuming that the council’s discounted purchase price will automatically be affordable. The discount can help considerably, but your income and circumstances still need to support the mortgage required.
How your Right-to-Buy discount may affect the mortgage
Your Right-to-Buy discount reduces the amount you pay for your home.
For example, if the property is valued at £170,000 and your discount is £26,000, the discounted purchase price would be £144,000.
Current GOV.UK Right to Buy guidance explains that some lenders treat the discount as the deposit, while others don’t.
This can be particularly useful if you have sufficient income to support the mortgage but haven’t built up a large cash deposit. However, we wouldn’t assume at the outset that you’ll definitely be able to buy with no cash deposit.
If you’re planning to use your Right-to-Buy discount as a deposit, we’d want to establish early whether the lenders suitable for the rest of your application will also accept the discount in this way.
What self-employed income evidence may lenders need?
The exact paperwork depends on how you’re self-employed and which lender you’re applying to.
You may be asked for:
SA302 tax calculations
Tax year overviews
Finalised business accounts
Personal bank statements
Business bank statements, where required
Accountant details or an accountant’s certificate
Contracts or evidence of ongoing work
Your Right to Buy offer or Section 125 Notice once issued
We’d normally recommend getting your latest accounts, tax calculations and tax year overviews together early rather than waiting until a lender asks for them.
When we’re reviewing an application, we’d want the income evidence to tell a consistent story. If your accounts, tax records and bank activity don’t appear to line up, that doesn’t necessarily stop you getting a mortgage, but we’d want to understand why before choosing a lender.
The documents requested can also differ between lenders, so having the right paperwork isn’t just about proving that you earn money. It’s about supporting the particular income figure the lender will use for affordability. Our guide to documents for your self-employed application explains the evidence you may need for your business structure.
Sole traders buying through Right to Buy
Sole traders are generally assessed using profit rather than turnover.
For example, if your business has £70,000 of sales but reports £38,000 net profit, it’s the profit figure that’s likely to be more relevant to the mortgage assessment.
We’d usually prefer to see stable or increasing profits rather than a sharp fall in the latest year. A reduction doesn’t automatically stop an application, but it’s something we’d want to understand before deciding which lenders are realistic.
Lenders can also take different approaches to fluctuating earnings. One may use an average across previous years, while another may place greater weight on your latest figures, particularly where income has fallen.
Limited company directors buying through Right to Buy
If you’re a limited company director, a Right-to-Buy mortgage can be more complicated because the amount your company earns isn’t necessarily the same as the income you personally withdraw.
Some lenders assess salary and dividends. Others may be able to consider your share of company profit or retained profit, depending on their criteria.
This is one of the situations where lender selection can make a significant difference.
If you deliberately take a relatively low salary and leave profit inside the company, we wouldn’t automatically assume your salary and dividends give the full picture of your financial position. How lenders assess salary, dividends and retained profit can therefore affect how much you’re able to borrow.
Contractors and freelancers buying through Right to Buy
Contractors and freelancers don’t always fit neatly into the same category.
Depending on how you’re paid, a lender might assess your tax returns and accounts or, in some circumstances, look at your current contract and day rate.
They may also consider:
How long you’ve been contracting
Your previous experience in the same industry
Gaps between contracts
How long remains on your current contract
Evidence that your work is likely to continue
If you’re contracting, we’d therefore want to establish how a lender is likely to classify your income before deciding what evidence you’ll need.
What if you only have one year’s accounts?
Having only one year’s accounts doesn’t necessarily mean you can’t get a Right-to-Buy mortgage, but your lender options may be more limited.
Some lenders can consider shorter trading histories, while others want a longer track record. The rest of the application can therefore become particularly important.
We’d recommend checking the available options before submitting an application rather than simply applying to your existing bank and hoping its criteria fit.
What else can affect your Right-to-Buy mortgage options?
Your self-employed income is only one part of the application.
A lender may also consider:
Credit history
Loans, credit cards and other commitments
Dependants and household expenditure
Your age and proposed mortgage term
The size of your Right-to-Buy discount
Whether the discount can act as the deposit
Property type and construction
Service charges if you’re buying a flat or leasehold property
The property itself can be important. GOV.UK notes that mortgage availability may be more limited for some high-rise flats, properties with non-traditional construction and properties on certain large or run-down estates.
This is something we’d want to identify early. A strong income and a large discount won’t help if the lender isn’t prepared to accept the property as security.
Example of a self-employed Right-to-Buy mortgage
Consider this illustrative example:
Property value: £170,000
Right-to-Buy discount: £26,000
Discounted purchase price: £144,000
Cash deposit: £0
Mortgage required: £144,000
Self-employed net profit: £38,000
A lender that accepts the discount as the deposit might consider a £144,000 mortgage.
However, we wouldn’t assume from those figures alone that the mortgage will be approved. The lender would still assess the applicant’s income history, existing commitments, credit record and the property itself.
Before applying, you can use our Right-to-Buy mortgage calculator to estimate how your discount could affect the purchase price and the amount you may need to borrow.
When to speak to a mortgage broker
In our experience, the more difficult self-employed Right to Buy applications usually aren’t difficult because of one single issue.
It’s often the combination of your business structure, trading history, income figures, Right-to-Buy discount, borrowing requirement and property that determines which lenders are realistic.
A broker can help work through those factors together, check how different lenders may assess your income and identify what evidence you’re likely to need before an application is submitted.
This can be particularly useful if you:
Have only one year’s accounts
Take a low salary from your company
Retain profit in the business
Work as a contractor
Want to use your discount as the deposit
Are buying a property that may be harder to mortgage
If you’re self-employed, getting Right-to-Buy mortgage advice before you apply can help establish whether your income, discount, borrowing requirement and property are likely to work together.
[FAQ]
Frequently asked questions
Can I get a Right-to-Buy mortgage if I’m self-employed?
Potentially, yes. Being self-employed doesn’t automatically prevent you from getting a Right-to-Buy mortgage. You’ll still need to meet the lender’s affordability, income evidence, credit and property requirements.
What documents do I need for a self-employed Right-to-Buy mortgage?
Depending on how you’re self-employed and the lender you use, you may need SA302s, tax year overviews, business accounts, bank statements or contracts. You’ll also normally need your Right to Buy paperwork once it has been issued.
Can my Right-to-Buy discount be used as my deposit?
Some lenders may accept the Right-to-Buy discount as the deposit, while others won’t. If you don’t intend to contribute a separate cash deposit, we’d recommend checking this before applying.
Can I get a Right-to-Buy mortgage with one year’s accounts?
It may be possible, but lender choice is generally more limited. Your previous experience, current business performance, credit history and overall application may become more important.
Do lenders use turnover or profit for self-employed mortgages?
For sole traders, lenders generally focus on profit rather than turnover. Limited company directors can be assessed differently, with salary, dividends or company profit potentially relevant depending on the lender.
Can limited company directors get Right-to-Buy mortgages?
Yes, potentially. We’d want to understand how you take income from the company before identifying suitable lenders, because different lenders can assess directors’ income in different ways.
Making Tax Digital (MTD) has changed how some self-employed people report their income and expenses to HMRC. But if you’re planning to apply for a mortgage, there’s an obvious question: does it also change the way lenders assess your income?
The short answer is no — Making Tax Digital doesn’t, by itself, change the rules for getting a mortgage.
Lenders still decide how they’ll assess self-employed income and what evidence they’ll accept. However, MTD does change the records you keep and the way you report them to HMRC, so it’s understandable to wonder what happens to documents such as SA302s — or whether your new quarterly figures could be used for a mortgage.
Instead of keeping records separately and reporting everything at the end of the year, people within MTD must use compatible software to keep digital records of their business or property income and expenses.
The software is also used to send HMRC quarterly updates and, at the end of the year, complete and submit the relevant tax return.
MTD for Income Tax is being introduced in stages. Under HMRC’s Making Tax Digital rules, the rollout depends on your qualifying income in an earlier tax year:
Qualifying income
When MTD applies
More than £50,000 in 2024/25
From 6 April 2026
More than £30,000 in 2025/26
From 6 April 2027
More than £20,000 in 2026/27
From 6 April 2028
“Qualifying income” doesn’t mean the same thing as the income a mortgage lender might use when assessing your application. For MTD, HMRC defines it as your total income from self-employment and property before expenses — essentially your turnover from those sources.
For example, a sole trader with £60,000 of turnover and £25,000 of allowable business expenses could be above the MTD threshold even though their business profit is substantially lower.
There’s also a particularly relevant change happening now. From September 2026, HMRC is automatically signing up some people who should already be using MTD but haven’t signed themselves up. HMRC says this applies where its records show qualifying income above £50,000 for 2024/25, with the process happening in stages over the following months.
Does Making Tax Digital change how lenders assess self-employed income?
Making Tax Digital changes how you report information to HMRC. It hasn’t introduced a new industry-wide calculation that mortgage lenders must use for self-employed applicants.
Mortgage lenders do, however, have regulatory requirements around affordability and income evidence. Under the FCA’s responsible lending rules, lenders taking income into account must obtain evidence adequate to support that income rather than relying on self-certification.
The FCA also recognises that the evidence required can vary according to factors such as whether someone is employed, self-employed or a contractor. Its guidance even notes that, for a self-employed customer, a lender may wish to consider projections of future income where they’re supported by a credible business plan.
In practice, lenders can still take different approaches to areas such as:
how many years of income they consider
whether they average income across multiple years
how they deal with increasing or falling profits
the figures they use for sole traders or company directors
Can lenders use your quarterly MTD figures for a mortgage?
Having more up-to-date financial information might sound particularly useful if your business has grown significantly since your last completed tax return.
But you shouldn’t assume that a lender will calculate your mortgage affordability from your latest quarterly MTD update.
HMRC describes quarterly MTD updates as summaries of the income and expense records held in your software. You don’t need to make all of the accounting or tax adjustments that might eventually apply before sending them.
That means a quarterly update isn’t the same thing as a completed annual tax return or final tax calculation.
For example, suppose your last completed tax year showed £35,000 of self-employed income, but your business has since grown considerably and your current records suggest you’re heading for a much stronger year.
Your newer records could provide useful context around how your business is performing, but you shouldn’t assume that every lender will use those figures as the basis of affordability. The lender will still need to decide what income it can evidence and reasonably take into account.
Your latest tax return doesn’t always tell the whole story, which is one reason how lenders assess self-employed earnings can make such a difference when income is rising or fluctuating.
Will Making Tax Digital replace SA302s?
As things stand, Making Tax Digital hasn’t made SA302s obsolete.
HMRC currently allows you to obtain evidence for the previous four tax years, along with tax year overviews. Where commercial software is used, the tax calculation may have a different name, such as a “tax computation”.
MTD users also still complete a year-end tax return. HMRC’s MTD guidance says that, once the relevant adjustments and other income have been added, you’ll use your compatible software to check the tax calculation and submit the return.
So if you’ve moved onto Making Tax Digital, don’t assume the quarterly reporting process has replaced the year-end income evidence traditionally used for mortgages.
What mortgage documents will you still need under MTD?
Making Tax Digital doesn’t mean there’s now a single set of documents every self-employed applicant needs.
Depending on your business structure, lender and circumstances, you could still be asked for evidence such as:
SA302s or tax calculations
tax year overviews
business accounts
personal or business bank statements
evidence relating to your trading history
additional information where your recent income has changed significantly
The exact requirements can vary. HMRC itself advises mortgage applicants to check what their provider will accept when obtaining SA302 and tax year overview evidence.
What if my MTD figures are higher than my last tax return?
This could become one of the more interesting mortgage questions created by MTD.
Imagine your last completed tax year reflects a relatively modest year, but your business has since expanded. Your digital records and quarterly updates now show significantly stronger performance.
That doesn’t automatically mean a lender will assess your mortgage using the newer figures.
The FCA’s guidance makes clear that income evidence can vary according to the applicant’s employment status and circumstances, and that lenders may consider future-income projections for a self-employed customer where they’re supported by a credible business plan. That doesn’t mean every lender will do so, or that an MTD quarterly update will be sufficient evidence on its own.
So if all of your income comes from your role as a director and shareholder of a limited company, that income doesn’t by itself put you over the MTD for Income Tax threshold.
You could still become subject to MTD if you separately receive sufficient qualifying income from another sole trade or from property.
Mortgage lenders also tend to assess company directors differently from sole traders. Depending on the lender, salary and dividends may be considered, while some lenders can take other business figures into account.
How to prepare for a mortgage if you’re using Making Tax Digital
If you’re thinking about applying for a mortgage, MTD itself shouldn’t be a reason to worry. But clear, up-to-date records can make it easier to understand and evidence your financial position.
A few sensible steps include:
Keep your digital business records accurate and up to date.
Make sure you can access your latest completed tax calculations and accounts.
Don’t assume your quarterly MTD updates will automatically replace the documents a lender normally requests.
If your income has risen or fluctuated, check how lenders may assess it before submitting an application.
Avoid choosing a lender purely on the advertised rate if your self-employed income needs more careful assessment.
If you want an initial indication of affordability, our self-employed mortgage calculator can give you a rough estimate of how much you might be able to borrow.
Getting a mortgage when you’re affected by Making Tax Digital
Making Tax Digital has changed tax reporting for many sole traders and landlords, but it hasn’t created a new set of mortgage rules.
The bigger issue is still how the lender assesses your self-employed income.
If your latest completed tax return doesn’t accurately reflect how your business is performing now, different lenders may take different approaches to the evidence available and the income they’re prepared to use.
Your latest tax return doesn’t always tell the whole story. If your income has changed since your last completed tax year, we can look at your circumstances and help identify lenders whose approach may be better suited to your business and income history.
Does Making Tax Digital affect mortgage applications?
Making Tax Digital doesn’t directly change mortgage eligibility or affordability rules. It changes how eligible sole traders and landlords keep records and report their income and expenses to HMRC. Mortgage lenders continue to assess affordability and decide what evidence they’ll accept.
Will Making Tax Digital replace SA302s?
There is currently no indication that SA302s have been replaced by MTD. As of September 2026, HMRC still specifically says self-employed mortgage applicants may be asked for an SA302 as evidence of earnings.
Can I use MTD quarterly updates as proof of income for a mortgage?
You shouldn’t assume that a lender will accept quarterly MTD updates as a replacement for its normal self-employed income evidence. HMRC describes quarterly updates as summaries rather than tax returns, and lenders still need appropriate evidence for the income they use in an affordability assessment.
Do I need Making Tax Digital software to get a mortgage?
No. MTD-compatible software is a tax reporting requirement for people who fall within the Making Tax Digital rules. It isn’t a mortgage application requirement.
Does Making Tax Digital apply to limited company directors?
Being a company director doesn’t automatically mean you’re covered by MTD for Income Tax. Employment income and dividends, including dividends from your own company, don’t count towards the MTD qualifying-income threshold. However, qualifying sole-trader or property income you receive separately could count.
What happens if HMRC automatically signs me up for MTD?
From September 2026, HMRC is automatically signing up people whose records show they should already be using MTD for the 2026/27 tax year but haven’t enrolled. Being signed up doesn’t itself change your mortgage eligibility, although you’ll need to follow HMRC’s MTD record-keeping and reporting requirements.
