Residential property investment loans: What are they, and how can they help to maximise your portfolio?

Find out what a property investment loan is, what they’re used for, and how you can grow your buy-to-let portfolio with fast financing from OakNorth.

There are a lot of good reasons to invest in property, but one of the most logical is that it’s typically less risky than investing in other things, like new businesses or technology. This is because it’s historically remained stable, even during times of high inflation and economic volatility.

Residential property is especially appealing as a full-time, or secondary investment, as the UK’s rental market is burgeoning – in 2021 the number of houses occupied by private renters in England was 4.43 million, an increase of 22%.

But investing in property isn’t limited to a buy-to-let portfolio, it’s a full-time business for those that are interested in ‘flipping’ houses too – aka investing in unloved buildings, restoring them to former glory, and then selling them for an increased price to make a profit.


Housing remains a healthy investment for long-term growth

Buying and flipping houses is a popular form of income for many people and businesses – which is unsurprising given that house prices across the UK have steadily increased over the past five years, with the average increase in 2017 being 4% and in 2021 being over 13%.

You could own a successful business investing in residential property, or you could be cutting your teeth in buy-to-let for the first time – whatever your status, it’s likely that you’ll be considering a residential property investment loan. But what exactly do you need to think about before getting a loan for an investment property?

In this guide, we’ll go through what a property investment loan is, when it should be used, what it can be used for, and why business loans for investment properties can help you accelerate your growth in a highly competitive market.

What is a residential property investment loan?

A residential property investment loan, also commonly known as a commercial loan for residential property, is financing designed especially for businesses, or individuals that want to buy real estate to let out for the long-term before deciding to sell. It’s called residential because the finance provided can only be used to buy buildings that will be used for residential living, as opposed to commercial purposes such as hotels, care homes or retail parks.

It’s also specifically for those looking to invest in property that has already been built, rather than for those looking to buy a plot of land to build housing on. There are separate specialist loans designed to support businesses in the property development sector.

Fast finance for your next buy-to-let

Ready to expand your residential portfolio? With OakNorth you can apply for a property investment loan online without fuss – you could even have indicative terms within a few minutes.


What can I use a residential property investment loan for?

You can use property investment loans to buy properties to let out, or to buy residential buildings that you improve and then resell for a profit. You’re not able to use these loans to buy a property that you intend to live in.

Many private businesses take out property investment loans to expand their current portfolio of buildings when exciting opportunities come up to do so. They’re not just reserved for businesses though, a lot of people investing in rental properties in the UK are doing it for a passive income, so will look for financing as an individual in their personal name.

When is the right time to apply for property investment finance?

Before applying for any loan, you should consider the risks that come with it. In the case of a residential property investment loan there are a few fundamental things you’ll need to consider before reaching out to lenders:

  1. How much is the property you’re buying worth?
  2. How much monthly rental income do you expect to earn?
  3. How much do you need to borrow and how much will you be investing yourself?
  4. How long do you want to borrow the money for?

Aside from the above, you’ll want to have a solid long-term business case for your property investment as you’ll need to pay back your loan and be able to service the interest. This means showing lenders that you:

  1. Are confident that you will have a constant source of rental income
  2. Could make a profit when deciding to sell the property
  3. Are set up for success as a property owner and have the right tenants
  4. Can sustain any periods of economic uncertainty that may impact the rental market


If you’re confident you’re in a financially stable position to take on a loan to buy property for an investment, then you can apply for a loan as soon as you have found a property, or verbally placed an offer.


What are the main benefits of residential property investment loans?

If you’re a business with a portfolio of successful rental properties, you’ll always be looking to find new properties to add which will accelerate your growth and bring in more revenue. But the real estate market is highly competitive, and things sell fast. Not having access to fast flexible financing when an opportunity arises could prove costly and you could miss out on an important sale.

And if an opportunity presents itself, but you haven’t got the capital to invest, taking out a loan will help you stretch your capital, while also not slowing down your growth.

Fast property investment financing in one streamlined online application

If you’ve found the perfect rental property to add to your portfolio, or to start it off, we can provide fast financing, so you’ll have the money in your account within weeks rather than months.

Once you’ve found a property to invest in, simply apply for your loan online using our easy online journey. You can easily upload all your information online, uploading your ID and financial information safely and securely. From there we can offer you indicative loan terms (subject to credit approval) within just five minutes*.

Don’t worry if you’re not tech-savvy though, it’s simple to use and if you need help at any point you can call up one of our expert advisors who will help you through the application process.

Ready to build your property portfolio, find out more, or apply online today.


*Subject to each application circumstances