Buy-to-Let Mortgage Calculator UK
Model: interest-only mortgage, the usual buy-to-let structure — the payment is interest only and the loan is repaid at the end of the term. Rental cover = monthly rent ÷ monthly mortgage payment. The stress test uses the higher rate you enter. Cash flow is rent minus the mortgage payment only, before tax, insurance, maintenance, voids and agent fees. This calculator is not mortgage advice and does not mean a lender will approve you.
How buy-to-let affordability works
Buy-to-let lending is different from a home mortgage. For your own home, the lender checks your salary. For a buy-to-let, the lender mainly checks the property’s rent. The key test is the interest coverage ratio (ICR), also called rental cover: the rent must cover the mortgage interest by a set margin, even when the interest is recalculated at a higher “stress rate”. The stress rate exists because the Bank of England’s Prudential Regulation Authority requires lenders to check you could still pay if rates rose; the minimum expectation is around 5.5%, and many lenders test at the higher of about 5.5% or your pay rate plus around 2%.
The typical ICR is 125% for basic-rate taxpayers and limited companies, and 145% for higher-rate and additional-rate taxpayers borrowing in their own name. The higher figure for higher-rate taxpayers exists because of Section 24: since April 2020 individual landlords cannot deduct mortgage interest from rental income for tax, so they keep less of the rent after tax and lenders demand a bigger cushion. If the rent does not pass the test, the lender does not usually refuse outright — it caps the loan at the amount the rent supports. That is why the calculator shows the minimum rent required at your chosen cover: on the example above, at a 5.5% stress rate and 125% cover, the minimum rent is £859.38 a month.
Worked example: £200,000 property, £50,000 deposit
| Figure | |
|---|---|
| Loan (75% loan-to-value) | £150,000 |
| Monthly payment at example rate 4.5% (interest-only) | £562.50 |
| Rental cover at £1,000 rent | 177.8% |
| Stressed payment at 5.5% | £687.50 |
| Stressed cover at £1,000 rent | 145.5% |
| Minimum rent at 125% cover, 5.5% stress | £859.38 |
| Monthly cash flow (rent minus payment, before other costs) | £437.50 |
At £800 of rent the cover falls to 142.2% at the pay rate — still above 125%, but the stressed cover would be about 116%, below the test, so a lender would cap the loan. At £1,200 of rent the cover is 213.3% and cash flow is £637.50 a month. Small changes in rent make a big difference to whether the deal passes.
What the cash flow figure leaves out
The £437.50 cash flow in the example is rent minus the mortgage payment only. Real cash flow is lower once you subtract insurance, maintenance, letting agent fees (typically 8–15% of rent plus VAT for full management), void periods, and tax on the rental profit. Run the full picture in our Rental Yield Calculator, which includes those costs. Also remember that an interest-only mortgage leaves the full £150,000 to repay at the end of the term — usually by selling the property or remortgaging. A repayment buy-to-let mortgage costs more each month but clears the debt; most buy-to-let borrowers choose interest-only to keep the monthly payment low, which is why this calculator uses it.
Other things lenders check
- Deposit. Most buy-to-let lenders want at least a 25% deposit (75% loan-to-value). Smaller deposits mean higher rates or no offer at all.
- Minimum income. Some lenders set a minimum personal income, commonly £20,000–£25,000, and more often for first-time landlords — but many large buy-to-let lenders have none.
- Your own home. Many lenders want you to already own your own home before they lend on a buy-to-let.
- Regulation. Not all buy-to-let mortgages are regulated by the Financial Conduct Authority. If the property will be let to a family member, different rules apply and the mortgage is regulated.
- Tax. Buying a second property attracts the 5% stamp duty surcharge, rental profit is taxed as income, and selling can attract Capital Gains Tax at 18% or 24%. See our Stamp Duty Calculator and Capital Gains Tax Calculator.
Buy-to-let is an investment, not a savings account. Rents can fall, tenants can leave, interest rates can rise, and property values can drop. Never borrow on the assumption that rents and values only go up. If you are unsure, speak to an FCA-regulated mortgage adviser and a qualified tax adviser before committing.
Limited company vs personal name
One of the biggest decisions for a landlord is whether to hold property in their own name or through a limited company. Since Section 24 removed mortgage interest relief for individual landlords, a company can look attractive: a company pays Corporation Tax on its profits (25% for most companies, 19% for small profits) and can deduct mortgage interest in full, while an individual gets only a 20% tax credit on the interest. But a company is not free money. Taking the profit out of the company — as salary or dividends — is taxed again, so the total tax depends on how much you take out and when. Companies also face higher mortgage rates, fewer lenders, higher legal and accounting costs, and no Capital Gains Tax annual exempt amount when they sell (companies pay Corporation Tax on gains instead). Transferring a property you already own into a company counts as a sale, so it can trigger stamp duty and Capital Gains Tax on the transfer itself. Many landlords with one or two properties are better off in their own name; larger portfolios and higher-rate taxpayers more often benefit from a company. This is a decision for a qualified tax adviser with your full figures in front of them — the wrong structure can cost more than it saves, and it is expensive to undo.
Portfolio landlords and the PRA rules
If you own four or more mortgaged buy-to-let properties, lenders class you as a portfolio landlord, and the Prudential Regulation Authority’s rules require them to look at your whole portfolio, not just the one property. That means a full business plan, evidence of the income and costs of every property, and stress tests applied across the portfolio. A weak property in the portfolio can drag down the application for a strong one, and some lenders will not lend to portfolio landlords at all. If you are building towards four properties, keep clean records from the start: a rent roll, a schedule of costs, tenancy agreements and tax returns for each property. Lenders will ask for them, and having them ready speeds up the application. It is also worth knowing that the stress test applies to the portfolio’s total rent against its total borrowing, so adding a high-yielding property can improve the position, while adding a low-yielding one can make the next application harder. Plan the portfolio as a whole, not one property at a time.
Related: Rental Yield Calculator · Stamp Duty Calculator · Capital Gains Tax Calculator
Sources: Bank of England Prudential Regulation Authority Supervisory Statement SS13/16 (buy-to-let underwriting standards); FCA mortgage rules. ICR figures are typical market practice, not a guarantee. Checked 13 November 2026.