Rely’s 85% Buy-to-Let Mortgages Could Cut the Deposit on a £400,000 Purchase by £40,000

A landlord buying a £400,000 rental property could need £40,000 less towards the purchase price if they qualify for borrowing at 85% rather than 75% loan-to-value. Rely’s latest launch puts that possibility on the table for eligible smaller landlords, while introducing a pricing advantage for homes with stronger EPC ratings.

The limited-edition range, reported on 28 October, gives investors another way to approach a purchase or refinance where available equity has been the constraint. The extra borrowing could preserve cash for repairs, reserves or another planned investment.

But the property must generate enough acceptable rent to support the loan. A higher borrowing ceiling changes the options available; it does not establish how much an individual landlord will receive.

This follows Willow’s reporting on Suffolk’s introduction of income top-slicing for landlords. Rely’s development concerns the proportion of the property value that can be financed, alongside EPC-based pricing. Those are different parts of the borrowing calculation.

What Rely has launched

According to BTL Insider, the new 85% LTV products cover purchases and remortgages by eligible non-portfolio landlords, including single-family lets and qualifying complex rental properties.

They are five-year fixed-rate products with a choice of no arrangement fee or a 2% arrangement fee. Properties with an EPC rating of A, B or C receive lower pricing than those rated D or below, subject to eligibility.

Financial Reporter corroborates the launch. Separately, BTL Insider reports reductions of 0.16 percentage points across Rely’s 80% LTV products for small, medium and large landlords. That wider repricing should not be confused with eligibility for the new 85% range.

How the deposit changes on a £400,000 purchase

The immediate difference is straightforward. Assuming the lender accepts a £400,000 valuation and the full loan passes underwriting, moving from 75% to 85% LTV increases borrowing from £300,000 to £340,000.

That £40,000 reduction in the contribution to the price may make a purchase possible sooner or leave more cash available afterwards. It is additional debt, with an associated financing cost.

The buyer still needs to fund the applicable property transaction tax, legal work, valuation and any mortgage fees. Repairs and a reserve for vacant periods also sit outside the deposit calculation. A 15% deposit is therefore not the same as a complete purchase budget.

The property count at completion matters

Rely’s product information describes its small-landlord category as investors with one to three mortgaged rental properties at completion. The number after the transaction is important.

Someone purchasing their second mortgaged rental property may fit that category. Someone buying a fourth could move into a different range, even if they regard themselves as a small landlord.

The lender’s criteria also explain that the count can include properties held personally and through company guarantees. Using a separate company does not automatically isolate the purchase from the wider borrowing position.

The launch therefore creates a targeted opportunity. It should not be presented as an 85% LTV option for every established portfolio owner.

The rent may set a lower borrowing limit

A property’s value answers one lending question: how much security supports the mortgage? Its rent answers another: can the borrowing meet the lender’s affordability assessment?

Rely publishes rental coverage requirements that vary with the property and borrower’s circumstances. The applicable assessment rate and coverage requirement need to be matched to the selected product.

For the same property, £340,000 is 13.3% more borrowing than £300,000. If the assessment rate and coverage requirement remain unchanged, the rent needed to support it rises by the same proportion.

A landlord whose rent already limits borrowing below 75% LTV may therefore gain little from an 85% product. The strongest fit is a property whose rental income can support the higher debt, where the borrower’s available deposit or equity has been the obstacle.

Passing that assessment still leaves the investor’s own cash-flow calculation. Rent must cover running costs as well as finance, with room for maintenance, unpaid rent and periods without a tenant.

The EPC discount is measurable, but keep it in proportion

Rely’s product guide dated 27 October lists an EPC A–C 85% purchase option at 6.73% with a 2% fee, product code RABD1134. The corresponding D-and-below option, RABD1142, is 6.78%. Both are five-year fixes and remain subject to their specific criteria.

The difference is 0.05 percentage points. Applied to an unchanged £340,000 interest-only balance, that equates to £170 a year, or approximately £14.17 a month, before other costs.

This gives energy performance a direct place in the mortgage comparison. However, that saving alone would not justify expensive improvement work. Any renovation decision needs to consider the works budget, likely rating achieved and the wider condition and appeal of the property.

An existing qualifying certificate is also different from an intention to improve the rating later. Confirm the evidence and timing needed for the selected product before assuming an EPC upgrade will secure its pricing.

A pricing band for D and below does not make every lower-rated property acceptable. The building must still meet the lender’s requirements and the applicable rules for letting it.

A 2% fee can change the comparison

On a £340,000 loan, a fee calculated at 2% is £6,800. That is significant beside both the deposit saving and the annual EPC-related interest difference.

The same guide lists an EPC A–C no-fee 85% purchase option at 7.24%, code RABD1133. This illustrates the choice between paying more initially and accepting a higher interest rate. It does not establish which option suits a particular borrower.

Compare the total cost over the expected holding period, including fees, interest and any early repayment charges. If a fee can be added to the mortgage, confirm whether that affects the LTV limit, available advance and interest payable.

The five-year fixed period also needs to fit the investment plan. A landlord intending to sell or restructure sooner should examine the exit terms before treating the initial rate as the deciding factor.

Higher borrowing leaves less room for a valuation fall

The same leverage that reduces the initial cash contribution makes changes in value more consequential for the owner’s equity.

If the illustrative £400,000 property fell to £360,000 while the mortgage remained £340,000, equity would fall from £60,000 to £20,000 before selling costs. The LTV would rise to approximately 94.4%.

This is a sensitivity example, not a house-price forecast. It shows why a landlord should consider the eventual refinance as well as the purchase. Lower values or weaker rent could reduce the choices available when the fixed period ends.

Keeping a useful cash reserve may be one reason to borrow more initially. Committing all the retained cash elsewhere could remove that protection, leaving a larger loan without a corresponding buffer.

What changes for landlords refinancing existing properties?

For an existing owner, the opportunity may be additional borrowing against a rental property or a refinance where there is insufficient equity for a lower-LTV product.

The usable proceeds depend on the approved advance less the existing mortgage redemption and transaction costs. The purpose of any additional borrowing also needs to meet the lender’s requirements.

There is also a timing question. Replacing an existing mortgage before its fixed period ends could trigger a repayment charge, while moving the whole balance to a different rate changes the cost of the existing debt as well as the extra borrowing. The amount released needs to justify that complete transaction.

Complex property owners should establish whether their particular letting arrangement, title and building fit the 85% products. The broader lender’s willingness to consider a property type does not guarantee maximum leverage for it.

The useful comparison is across borrowing levels

Rely’s launch is most relevant to qualifying landlords whose purchase or refinance has been held back by available equity. It creates another option to test against the rent and the property.

The practical comparison should include suitable 75%, 80% and 85% products, using the same valuation, ownership structure and rental evidence. Rely’s simultaneous 80% repricing makes that middle option worth considering too.

Two investors buying identical properties can reach different decisions. One may value retaining cash to cover a planned repair; another may have ample reserves and prefer lower ongoing borrowing costs. Both need the figures for their own proposed transaction.

For Willow, the value is identifying where extra borrowing solves a specific funding problem at an acceptable cost. The best outcome may be a smaller deposit, more retained cash or a workable refinance. It will depend on the investor’s circumstances, rather than the largest loan advertised.