What is a Specialist Buy-to-Let Mortgage?

A specialist buy-to-let mortgage is designed for properties or borrower circumstances that don’t meet standard BTL lending criteria. This includes:

• Property types:HMOs, holiday lets, multi-unit blocks, properties above commercial units
• Borrower circumstances:Large portfolios (10+ properties), trading companies, non-UK residents, adverse credit
• Tenancy types:Short-term lets, serviced accommodation, corporate lets

Specialist BTL mortgages typically have:

• Higher interest rates (5.5-9%)
• Lower loan-to-value ratios (60-75% LTV, so 25-40% deposit required)
• More stringent affordability assessments
• Smaller lender panel (not all lenders offer these products)

Types of Specialist Buy-to-Let Mortgages

Houses in Multiple Occupation (HMOs)

What is an HMO?

An HMO is a property rented to 3 or more unrelated tenants who share facilities (kitchen, bathroom, living areas). Each tenant typically has their own bedroom and pays rent separately.

Common HMO types:

• Student accommodation (3-6 bedrooms)
• Professional house shares (young professionals sharing)
• Bedsit conversions (self-contained rooms with shared facilities)

HMO Licensing Requirements:

In Scotland, all HMOs require a license from the local council, regardless of size. In England and Wales, licensing applies if:

• 5+ tenants from 2+ households share facilities, OR
• The property is 3+ storeys and houses 5+ tenants

HMO Mortgage Requirements:

• Minimum property value:£75,000-£100,000
• Deposit:25-30% (some lenders require 35-40%)
• Rental coverage:125-145% of mortgage payment (stress-tested at 5.5%)
• HMO license:Must be in place (or applied for) before completion
• Experience:Some lenders require previous HMO or BTL experience
• Interest rates:5-8%

Why HMO Mortgages Are Specialist:

HMOs generate higher rental income but also carry higher risk:

• Higher tenant turnover (students moving annually)
• More wear and tear on the property
• Stricter safety regulations (fire doors, alarms, emergency lighting)
• Management intensive (multiple tenants, multiple ASTs)

Lenders who provide HMO mortgages:

• NatWest
• Leeds Building Society
• Yorkshire Building Society
• Hampshire Trust Bank
• CHL Mortgages
• Keystone Property Finance
• Together Money
• The Mortgage Works
• Paragon Bank
• Foundation Home Loans
• LendInvest
• Fleet Mortgages

Multi-Unit Freehold Blocks (MUFB)

What is a MUFB?

A Multi-Unit Freehold Block is a freehold building containing 4 or more self-contained residential units (flats), all owned by the same landlord.

Examples:

• A converted Victorian house with 4 self-contained flats
• A purpose-built block of 6 flats
• A small apartment building with 8 units

MUFB Mortgage Requirements:

• Minimum units:4 (some lenders accept 3)
• Maximum units:Typically 8-10 (larger blocks may require commercial finance)
• Deposit:25-35%
• Rental coverage:125-145% (assessed on total rental income from all units)
• Property condition:Must be in good repair (lenders are stricter on MUFBs)
• Interest rates:5-8%

Why MUFB Mortgages Are Specialist:

MUFBs are more complex than single BTL properties:

• You’re responsible for building maintenance (roof, structure, communal areas)
• Void risk is higher (if 2 out of 6 flats are empty, you lose 33% of rental income)
• Lenders assess the entire block, not individual flats
• Valuation is more complex (block value vs. sum of individual flat values)

Lenders who provide MUFB mortgages:

• Paragon Bank
• Shawbrook Bank
• Landbay
• Fleet Mortgages
• Barclays
• Nationwide
• Lloyds
• West One Loans
• Foundation Home Loans
• LendInvest
• Aldermore

Holiday Lets & Short-Term Lets

What is a Holiday Let Mortgage?

A holiday let mortgage is for properties rented out on a short-term basis (typically less than 6 months per booking) to holidaymakers or tourists. This includes:

• Airbnb and Booking.com rentals
• Self-catering cottages
• Coastal or rural holiday homes
• City centre short-term lets

Holiday Let vs. Standard BTL:

Standard BTL mortgages require an Assured Shorthold Tenancy (AST) with a minimum 6-month term. Holiday lets do not meet this requirement, so you need a specialist holiday let mortgage.

Holiday Let Mortgage Requirements:

• Deposit:25-40% (higher than standard BTL)
• Rental income assessment:Based on projected annual income (not actual AST rent)
• Location:Must be in a tourist area or city with strong short-term rental demand
• Furnishing:Must be fully furnished to a high standard
• Management:Lenders may require professional management company
• Interest rates:5-8.5%
• Planning permission:Some councils require planning permission for short-term lets (especially in Scotland and London)

Why Holiday Let Mortgages Are Specialist:

Holiday lets are higher risk for lenders:

• Income is seasonal (high in summer, low in winter)
• Higher void periods (property may be empty 30-50% of the year)
• More wear and tear (frequent guest turnover)
• Regulatory risk (councils can restrict short-term lets)

Lenders who provide holiday let mortgages:

• Barclays
• LendInvest
• Cumberland Building Society
• Bath Building Society
• Furness Building Society
• Leeds Building Society
• Hodge Bank
• Together Money
• Foundation Home Loans
• West One Loans

Furnishing Grants & Tax Benefits:

Holiday lets that qualify as Furnished Holiday Lets (FHLs) receive tax benefits:

• Capital allowances on furniture and equipment
• Mortgage interest fully deductible (unlike standard BTL)
• Capital Gains Tax relief (Business Asset Disposal Relief)

To qualify as a FHL, the property must be:

• Available for let at least 210 days per year
• Actually let for at least 105 days per year
• Let on a commercial basis (not to family/friends at discounted rates)

Serviced Accommodation

What is Serviced Accommodation?

Serviced accommodation (SA) is short-term rental property (typically 1-3 months) that includes hotel-like services such as:

• Weekly cleaning and linen changes
• Utilities and Wi-Fi included
• Fully furnished and equipped
• Reception or concierge service (in some cases)

Common SA types:

• Corporate lets (business travelers, contractors)
• Relocation accommodation (families moving to a new area)
• Extended stay apartments (tourists, medical patients)

Serviced Accommodation Mortgage Requirements:

• Deposit:30-40%
• Rental income assessment:Based on projected nightly/weekly rates
• Location:Must be in area with strong corporate or tourist demand
• Property standard:Must be furnished to a high standard
• Management:Professional management often required
• Interest rates:6-9%

Why SA Mortgages Are Specialist:

Serviced accommodation is even higher risk than holiday lets:

• Very short tenancies (1 night to 3 months)
• High operational costs (cleaning, utilities, management)
• Regulatory complexity (may require business rates, not council tax)
• Lenders view it as a business, not passive investment

Lenders who provide SA mortgages:

• Together Money
• Furness Building Society
• Shawbrook
• Market Harborough Building Society
• Metro Bank

Properties Above Commercial Premises

What is a Property Above Commercial Premises?

This is a residential flat or apartment located above a commercial unit such as:

• Shop
• Restaurant or takeaway
• Pub or bar
• Office
• Garage or workshop

Why Are These Properties Specialist?

Lenders view properties above commercial premises as higher risk:

• Fire risk:Commercial kitchens, electrical equipment, or flammable materials increase fire risk
• Noise and disturbance:Pubs, restaurants, and takeaways operate late at night
• Structural concerns:Commercial use may cause more wear and tear on the building
• Valuation issues:Harder to value and sell (smaller buyer pool)
• Lease complications:If the flat is leasehold, the commercial lease may affect the residential lease

Mortgage Requirements:

• Deposit:25-35%
• Property type:Must be self-contained (separate entrance preferred)
• Commercial use:Lenders assess the type of business (takeaways and pubs are higher risk)
• Fire safety:Must meet building regulations (fire doors, alarms, escape routes)
• Interest rates:5-8%

Lenders who accept properties above commercial premises:

• Together Money
• Interbay
• Shawbrook Bank
• NatWest
• West One Loans
• Accord Mortgages

Note: Some lenders will not accept flats above certain commercial uses (e.g., takeaways with deep-fat fryers, pubs with late licenses).

Large Property Portfolios (10+ Properties)

What is a Large Portfolio?

A large portfolio landlord owns 10 or more mortgaged buy-to-let properties. (Landlords with 4-9 properties are classed as “portfolio landlords” and face stricter underwriting, but not as strict as large portfolios.)

Why Are Large Portfolios Specialist?

Since 2017, lenders must assess your entire portfolio when you apply for a new BTL mortgage. For large portfolios (10+ properties), this becomes highly complex:

• Lenders stress-test all properties at 5.5% to ensure you can afford them
• Rental income and mortgage payments across all properties are reviewed
• If any properties have tight rental coverage, it can affect your ability to borrow
• Some lenders cap the number of properties they’ll lend against (e.g., high street banks typically cap 5-10 properties, while specialist lenders accept larger portfolios)

Large Portfolio Mortgage Requirements:

• Deposit:25-30% (some lenders require 35%)
• Portfolio review:Full schedule of all properties (addresses, values, rents, mortgages)
• Rental coverage:Must meet ICR requirements across the entire portfolio
• Experience:Lenders expect significant landlord experience
• Interest rates:5-8%

Lenders who accept large portfolios:

• Paragon Bank
• Shawbrook Bank
• Foundation Home Loans
• Precise Mortgages
• The Mortgage Works
• Together Money

High street banks (Barclays, HSBC, NatWest) typically cap portfolios at 5-10 properties.

Trading Company Buy-to-Let Mortgages

What is a Trading Company BTL Mortgage?

Most BTL mortgages for limited companies are issued to Special Purpose Vehicles (SPVs)—companies set up solely to hold property investments. However, some landlords want to purchase BTL properties through their existing trading company (a company that operates a business, not just holds property).

Examples of trading companies:

• A construction company buying a BTL property
• A restaurant business purchasing a flat as an investment
• An accountancy firm buying an office building with residential flats above

Why Are Trading Company BTL Mortgages Specialist?

Lenders are cautious about lending to trading companies because:

• Business risk:If the trading business fails, the property could be at risk
• Cross-collateralisation:The property may be used as security for business debts
• Complex financials:Trading company accounts are more complex than SPV accounts
• Director guarantees:Lenders may require personal guarantees from directors

Very Limited Lender Panel:

Only a handful of specialist lenders will consider trading company BTL mortgages:

• Shawbrook Bank
• Aldermore
• Together Money

Trading Company BTL Requirements:

• Deposit:30-40% (higher than SPV mortgages)
• Company financials:Last 3 years’ accounts, showing profitability
• Director guarantees:Usually required
• Interest rates:5-9% (higher than SPV rates)
• Loan size:Typically minimum £100,000

Why the Limited Choice?

Lenders prefer SPVs because:

• SPVs are ring-fenced (property is the only asset, so risk is contained)
• SPV accounts are simple (rental income in, mortgage and costs out)
• No business risk (SPV doesn’t trade, so can’t go bust due to business failure)

Trading companies mix business risk with property risk, so lenders charge higher rates and require larger deposits.

Should You Use a Trading Company or SPV?

Use an SPV if:

• You’re building a property portfolio (cleaner structure)
• You want the lowest rates and best LTVs
• You want to separate property from business risk

Use a trading company if:

• You already own the company and don’t want to set up a new SPV
• The property is connected to your business (e.g., staff accommodation)
• You’re only buying 1-2 properties and don’t plan to expand

Other Specialist BTL Scenarios

Non-UK Resident Investors

Who qualifies?

• Expats living abroad (British citizens working overseas)
• Foreign nationals investing in UK property

Requirements:

• Higher deposits (30-40%)
• Proof of income (overseas tax returns, payslips)
• UK bank account (some lenders require this)
• Some lenders require UK credit history

Lenders who accept non-UK residents:

• West One Loans
• Together Money
• Gatehouse Bank
• Market Harborough Building Society
• Molo Finance

Shariah-Compliant Finance (Islamic Mortgages)

What is Shariah-compliant finance?

Islamic finance prohibits interest (riba), so Shariah-compliant mortgages use alternative structures:

• Ijara (lease):Lender buys the property and leases it to you; you buy it back over time
• Murabaha (cost-plus):Lender buys the property and sells it to you at a higher price, payable in installments
• Diminishing Musharaka (co-ownership):You and the lender co-own the property; you buy out the lender’s share over time

Lenders who provide Shariah-compliant BTL finance:

• Gatehouse
• Al Rayan Bank
• Strideup (formerly Wayhome)

Requirements:

• Similar to Standard BTL (25-30% deposit, rental coverage)
• Slightly higher costs (Shariah-compliant products are less common, therefore less competitive)

Why Choose Capital 8 Finance for Specialist BTL Mortgages?

Specialist Lender Access

At Capital 8 Finance, we have access to the UK’s full range of specialist BTL lenders.

Expert Guidance for Complex Cases

Specialist BTL mortgages require expert knowledge:

• Understanding which lenders accept which property types
• Structuring applications to maximize approval chances
• Navigating complex affordability assessments (especially for large portfolios)
• Advising on tax efficiency (SPV vs. trading company vs. personal name)

Transparent Pricing

• Broker fee:1% of loan amount (e.g., £3,000 on a £300,000 mortgage)
• Payable on completion only(no upfront fees)
• No hidden costs– Full breakdown of all fees provided upfront

Frequently Asked Questions

Do I need an HMO license before applying for a mortgage?

Most lenders require the HMO license to be in place (or at least applied for) before they’ll issue a mortgage offer. In Scotland, you must have the license before you can legally operate an HMO.

Can I convert a standard BTL mortgage to a holiday let mortgage?

No. If you want to change the use of your property from standard BTL (AST tenancy) to holiday let (short-term lets), you must remortgage to a holiday let product. Using a standard BTL mortgage for holiday lets is a breach of your mortgage terms.

What’s the difference between an HMO and a MUFB?

• HMO:One property with multiple tenants sharing facilities (kitchen, bathroom)
• MUFB:One building with multiple self-contained flats, each with its own facilities

Can I get a BTL mortgage for a property above a takeaway?

Possibly, but it’s more difficult. Lenders view takeaways (especially those with deep-fat fryers) as high fire risk. You’ll need:

• A specialist lender (not a high street bank)
• Higher deposit (30-35%)
• Evidence of fire safety measures (fire doors, alarms, sprinklers)

How many properties can I own before I’m considered a large portfolio landlord?

• 4-9 properties:Portfolio landlord (stricter underwriting)
• 10+ properties:Large portfolio landlord (very strict underwriting, limited lender panel)

Should I buy through an SPV or my trading company?

SPV is better for most landlords because:

• Lower rates (typically 0.5-1% cheaper)
• Higher LTVs (75% vs. 60-70%)
• Wider lender choice
• Cleaner structure (property risk separated from business risk)

Trading company only makes sense if the property is directly connected to your business (e.g., staff accommodation) or you’re only buying 1-2 properties.

How to Apply for a Specialist BTL Mortgage

Step 1: Initial Consultation

Contact me to discuss:

• Property type and location
• Your investment strategy
• Your experience as a landlord
• Your portfolio (if applicable)

Step 2: Lender Selection

I’ll identify suitable specialist lenders based on:

• Property type (HMO, MUFB, holiday let, etc.)
• Your borrower profile (portfolio size, experience, credit history)
• Loan amount and LTV

Step 3: Documentation

Specialist BTL applications require more documentation than standard BTL:

• Personal:ID, proof of address, bank statements, tax returns
• Property:Full address, purchase price, rental income projection, HMO license (if applicable)
• Portfolio:Schedule of all properties (addresses, values, rents, mortgages)
• Company:Incorporation docs, accounts, director guarantees (if applicable)

Step 4: Application & Valuation

• I’ll submit the application to the chosen lender
• Lender arranges specialist valuation (£400-£800)
• Underwriting (typically 3-6 weeks for specialist cases)

Step 5: Mortgage Offer & Completion

• Lender issues formal offer (valid 6 months)
• Solicitor handles legal process (4-8 weeks)
• Completion: funds released, keys collected
• My broker fee (1%) paid on completion

Get Expert Specialist BTL Mortgage Advice

Whether you’re investing in HMOs, holiday lets, multi-unit blocks, or building a large portfolio, I offer:

✅ Free initial consultation to assess your investment goals

✅ Access to specialist BTL lenders across the UK

✅ Expert guidance for complex property types and borrower circumstances

✅ Transparent pricing (1% broker fee, payable on completion only)

Serving property investors across Scotland, England, and Wales.

Capital 8 Finance – Expert specialist buy-to-let mortgage advice for complex property investments.