How to use the Buy-to-Let Mortgage Calculator
- 1 Enter the expected monthly rent.
- 2 Choose the interest cover ratio for your tax position.
- 3 Enter the lender's stress rate and the property price.
- 4 Enter the maximum LTV and your mortgage rate, then read the loan available.
Worked example
A landlord expects £1,200 a month rent on a £200,000 property. At a 125% cover ratio and 5.5% stress rate, the rent supports about £209,455 of borrowing, but the 75% LTV cap limits the loan to £150,000. The deposit is £50,000, and interest-only payments at 4.8% are about £600 a month.
Features
Rental cover test
Rent must cover interest at a stress rate by 125% or 145%.
LTV limit
Loan also capped by the lender's loan-to-value.
Deposit needed
Price minus the loan available.
Interest-only payment
Monthly cost on your actual mortgage rate.
When to use it
New landlords
See how much deposit you need.
Limited companies
Check borrowing at the 125% cover ratio.
Remortgaging
See if rent supports a bigger loan.
Comparing properties
Check which rents support the price.
Frequently asked questions
How do buy-to-let lenders decide how much I can borrow?
Mainly on the rent, using an interest cover ratio. The rent must usually be at least 125% or 145% of the mortgage interest at a stress rate, as well as staying within a maximum loan-to-value.
What is the interest cover ratio?
The rent as a percentage of the interest. Lenders often use 125% for basic rate taxpayers and limited companies and 145% for higher rate taxpayers, because of the Section 24 tax rules.
What is the stress rate?
A rate higher than your actual rate, used to test that the rent would still cover the interest if rates rose. Five-year fixes are often stressed at the pay rate.
How much deposit do I need?
Usually at least 25% of the property price. Some lenders accept 20% but at higher rates.
Do I pay extra stamp duty?
Yes. In England and Northern Ireland, additional residential properties pay a 5% surcharge on top of normal rates. Scotland and Wales have their own additional property taxes.
Are buy-to-let mortgages interest-only?
Most are, so the monthly payment covers only interest and the full loan must be repaid at the end, usually by selling or refinancing.
Can I use my salary to borrow more?
Some lenders use top slicing, using your personal income to make up a shortfall in rental cover.
Should I buy in a limited company?
Companies can deduct mortgage interest in full and usually get the lower cover ratio, but rates and fees can be higher. Get tax advice.
Are buy-to-let mortgages regulated?
Most are not regulated by the FCA, unless the property is let to a close family member.
What other costs should I budget for?
Letting agent fees, insurance, repairs, safety certificates, voids and tax on rental profit.
Results are estimates based on the official rates linked above. Confirm important figures with the issuing authority or a qualified adviser before you act on them.
Reviewed by ToolsUnlocked Team · Last updated