Edinburgh · Scotland · UK-wide
A buy-to-let mortgage is assessed mainly on the rent the property will produce rather than on your salary. Lenders apply a rental stress test, typically requiring the expected rent to cover 125% to 145% of the mortgage interest at a notional stressed rate. In Edinburgh, where rental demand from students, NHS staff and professionals is strong but the Additional Dwelling Supplement adds 8% to the purchase cost, getting the structure right at the outset matters more than shaving a few basis points off the rate. Prime Mortgages advises landlords across Edinburgh and the Lothians, from a first flat to a portfolio.
Two figures drive a buy-to-let decision: loan to value, and the rental stress calculation. Most lenders cap buy-to-let at 75% loan to value, with better pricing at 60% and 65%.
The stress test asks whether the rent covers the interest with a margin. A higher-rate taxpayer borrowing personally is usually stressed at 145%, a basic-rate taxpayer at 125%, and a limited company often at 125% — which is one of the reasons company structures let you borrow more on the same property.
| Borrower | Typical stress ratio | Effect |
|---|---|---|
| Basic-rate taxpayer, personal name | 125% | Higher borrowing |
| Higher-rate taxpayer, personal name | 145% | Noticeably lower borrowing |
| Limited company (SPV) | 125% | Higher borrowing, and full interest relief |
| Five-year fixed rate | Often reduced ratio | Most lenders relax the stress on five-year fixes |
That last row matters. Because a five-year fix removes short-term rate risk, most lenders apply a softer stress test to it — so a five-year fixed rate frequently allows a materially larger loan than a two-year one on the same property.
The Additional Dwelling Supplement is charged at 8% of the full purchase price on any additional residential property, on top of standard LBTT. On a £200,000 Edinburgh flat that is £16,000 before you have bought a single item of furniture.
It is the single biggest difference between investing in Scotland and investing in England, and it needs to be in your model from day one.
Since the phased removal of higher-rate interest relief for individual landlords, a limited company (usually a special purpose vehicle) has become the default for higher-rate taxpayers building a portfolio. Companies deduct mortgage interest as a business expense in full; individuals receive only a basic-rate tax credit.
It is not free. Company buy-to-let rates and arrangement fees are typically higher, you will need an accountant, and moving existing personal properties into a company is a sale and purchase — triggering ADS and potentially capital gains tax.
We will model both and tell you which is better for your situation, and we work alongside your accountant on the tax side.
No fee for the initial conversation, and no obligation. We usually reply the same working day.
Common questions
Usually 25% of the property value, since most buy-to-let lenders cap at 75% loan to value. Rates improve at 40% and 35% deposits. On top of the deposit you need the Additional Dwelling Supplement at 8% of the purchase price, standard LBTT, and your legal and advice fees.
Lenders check that the expected rent covers the mortgage interest with a margin — commonly 125% for basic-rate taxpayers and limited companies, and 145% for higher-rate taxpayers, calculated at a stressed notional rate rather than your actual rate. Five-year fixed rates are usually stress tested more generously, so they often allow a larger loan.
Yes. ADS is charged at 8% of the full purchase price on any additional residential property in Scotland, in addition to standard LBTT. It applies whether you buy personally or through a limited company.
Almost certainly not on a standard buy-to-let product. Most buy-to-let mortgages prohibit short-term letting, and Edinburgh operates a short-term let control area requiring both a licence and, in most cases, planning permission for change of use. There are specialist holiday-let mortgage products, and letting in breach of your mortgage conditions can put you in default — so this needs to be arranged properly from the start.
If you are a higher-rate taxpayer building a portfolio, a limited company is usually more tax-efficient because interest is fully deductible, and lenders stress test companies more generously. If you are a basic-rate taxpayer buying one property, personal ownership is often simpler and cheaper. The right answer depends on your tax position — we model both and work with your accountant.
Most lenders require you to already own your own home, but not all. A small number of lenders will consider first-time landlords who are not homeowners, usually with a larger deposit and tighter criteria.
Yes, but it needs a specialist HMO lender rather than a mainstream buy-to-let product, and the property needs an HMO licence from City of Edinburgh Council. Lending is usually based on the room-by-room rental income, which can be considerably higher than a single-family let.
A twenty-minute conversation will tell you what you can realistically borrow, what it will cost and whether it is worth doing. It is free, and we will tell you honestly if the answer is no.