Buy-to-Let Mortgage Calculator

If you’re looking to invest in new rental property or remortgage an existing one, calculating your borrowing capacity is essential. Our Buy-to-Let mortgage calculator can show you how much you could borrow; as well as your mortgage costs, and your potential profits, based on your expected rental income and current interest rates.

You can find our calculator at the top of this page.

What is a Buy-to-Let mortgage calculator?

A buy-to-let mortgage calculator helps landlords to determine the feasibility of a property investment. Unlike residential calculators that focus on personal affordability, a buy-to-let calculator primarily looks at the rental yield and Interest Coverage Ratio (ICR).

These metrics can be used to ensure that the rent generated by the property is sufficient to cover the mortgage interest payments, even if interest rates rise or the property sits vacant for short periods.

How does this calculator work?

Our Buy-to-Let calculator works out a number of factors about your potential buy-to-let investment. It uses the standard industry figures* for stress testing to give you a realistic idea of what a lender might offer, however, the following will need to be input to tailor the results as accurately as possible to your personal circumstances:

• Property value

• Deposit amount

• Expected mortgage interest rate

• Repayment type - this field defaults to interest-only as most buy-to-let mortgages are offered on this basis, but it’s possible to change to capital repayment if that’s your preference

• Your tax bracket

• The rent you plan to charge for the property

*Keep in mind that different lenders may stress test your mortgage application at different rates.

Given this information, the calculator results will tell you the following:

• How much you could borrow for a buy-to-let property based on the expected rental income and your LTV (Loan to Value)

• What your monthly mortgage repayments would likely be for this level of borrowing

• Your monthly profit

• An investment summary: This gives an estimation of your gross and net rental yields, whether or not you’ve achieved the minimum ICR to qualify for a buy-to-let mortgage of this size, and your LTV

How accurate are the results?

Mortgage calculators can provide a helpful guide for those looking to buy any type of property, including buy-to-let investments. Our calculator is particularly helpful as it provides an investment summary, which is not a common function of buy-to-let calculators.

That said, it’s important to understand that no online calculator can give you a definitively accurate set of results. This is because they can not possibly consider every eventuality of your personal circumstances.

For example, while you may have input a fairly competitive interest rate, this won’t necessarily be what you’re offered. Lenders will consider your credit history, experience, and many specifics about the rental property when they calculate the rate available to you.

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Example Calculations

When it comes to deciding whether a buy-to-let investment is achievable, it’s a good idea to have a few different options in mind. Whether that’s considering properties in different areas or different sized properties within the same area, this will help find a solution that works for you in terms of both feasibility and profitability.

For inspiration, check out our article listing the best areas for buy-to-let property in the UK.

To help, we’ve provided some example calculations below to demonstrate how different aspects of the mortgage can impact what you can borrow and how much you can make on a property:

Interest-only vs Repayment

Deciding between Interest-Only and Capital Repayment will depend on whether you prioritise monthly cash flow or long-term equity growth. Most landlords opt for interest-only mortgages, but it’s important to be aware how much additional interest this incurs:

These calculations assume a fixed interest rate of 5% over 25 years

Loan-to-Value (LTV) vs. Interest Rate

A landlord with a 40% deposit (60% LTV) can access rates nearly 1.5% lower than someone with a 20% deposit. This table shows how your deposit size directly affects your monthly interest-only mortgage costs on an average £300,000 property.

Length of mortgage term

This table assumes the mortgage size remains at £225,000, which is based on the average UK property value of £300,000 at 75% LTV, and has a fixed interest rate of 4.75%, the current average for this type of buy-to-let deal.

Difference in rental value

This table has been created using the current average stress-testing and is for example purposes only. It is based on the following:

• Property Value: £280,000 (standard UK average excluding London).

• Target LTV: 75% (£210,000 mortgage)

• Stress Test Rate: 5.5%

• ICR Buffer: 125% for Limited Companies/Basic Rate taxpayers, and 145% for Higher Rate taxpayers

Tip: In some areas it may be necessary to look at HMO letting in order to meet the ICR for the minimum property value in the area. However, higher rental yields are typically available in the north of England, Scotland and Wales. Cities, such as Manchester and Liverpool often offer a broad range of rental yields and different rental property types.

Property in personal Name vs. Limited Company (SPV)

Under ‘Section 24’ rules, personal landlords are taxed on revenue, while Limited Companies are taxed on profit. This table assumes that the landlord with a property in their own name is a higher rate tax payer.

This example is for a property generating £18,000 in rent per year with £10,000 in mortgage interest payable per year.

Tip: In this scenario the Limited Company structure leaves the landlord with £3,680 more cash for the exact same property. However, landlords should remember that mortgage rates are often higher for company buy-to-let mortgages, and that you may be subject to dividend tax.

What to do after running your calculations

When you have a better idea of the feasibility of your investment, it's a good idea to speak to a mortgage broker with buy-to-let experience. Our buy-to-let experts have whole-of-market access and may be able to offer rates not available online.

If you’re new to property investment the buy-to-let industry can be overwhelming. Every lender has considerably different criteria, and there are many financial factors to consider that wouldn’t apply to a traditional mortgage, such as top-slicing and ICR.

We can walk you through the process, whether you’re an experienced portfolio landlord or just starting out as a first-time landlord. #advisermodalGet started here for a free, no-obligation chat with a helpful adviser.