Buy-to-Let Mortgage Calculator

With an interest-only mortgage, your monthly payment only covers the interest, so the original loan amount stays the same and needs to be repaid separately, usually by selling the property or remortgaging. With a repayment mortgage, each payment also reduces the balance, so you gradually pay off the loan and own the property outright by the end of the term. Most buy-to-let mortgages in the UK are interest-only, since landlords are typically running the property as an investment rather than aiming to own it debt-free by a set date, but repayment is available too.

It's an affordability check lenders are required to carry out, based on Bank of England / PRA underwriting expectations introduced in 2017. Instead of checking whether your rent covers your actual mortgage payment, lenders check whether it would cover a notional, higher stress-tested payment, commonly using a rate of around 5.5% and requiring rent to be at least 125% of that notional interest (or 145% for higher-rate taxpayers). This protects against a scenario where rates rise or a tenant leaves. Both the stress rate and required percentage vary by lender, which is why this calculator lets you adjust them.

Since April 2020, landlords who own property in their personal name can no longer deduct mortgage interest from their rental income before working out their tax bill; instead, they get a flat 20% tax credit. This hits higher-rate taxpayers harder, since the tax credit doesn't fully offset the interest cost at their higher tax rate, so lenders typically require more rental headroom (commonly 145% instead of 125%) to compensate. Landlords buying through a limited company aren't affected by this rule and are usually assessed at the lower 125% requirement instead.

It varies a lot by area and property type, but as a rough guide, gross yields (rental income before costs, as a percentage of property value) below around 5% are often considered low for a buy-to-let investment, while yields above 7-8% are generally considered strong, though they can also signal a higher-risk area. Gross yield doesn't account for your mortgage, void periods, maintenance or tax, so it's a starting comparison point rather than a full picture of profitability; this calculator's net monthly cash flow figure gives you a more complete view.

Most lenders base their affordability assessment on the expected market rent for the property, often confirmed by a surveyor as part of the valuation, rather than requiring you to already have a tenant in place. If you're buying to let for the first time, use a realistic estimate of achievable local rent, ideally checked against similar properties actually being let nearby, rather than an optimistic guess.

Usually, yes. Most buy-to-let mortgages cap borrowing at around 75% loan-to-value, meaning a deposit of at least 25%, compared with residential mortgages which can sometimes go up to 90-95% loan-to-value. Some specialist lenders offer higher loan-to-value buy-to-let products, but rates are typically less competitive than at 75% or below.

No. It shows gross rental income against your mortgage and other costs, not your after-tax position. Rental profit is subject to Income Tax (or Corporation Tax if held through a limited company), and the rules around what you can deduct, especially mortgage interest, changed significantly from 2017 to 2020 for personally-held property. For an accurate picture of your tax liability, use HMRC's guidance or speak to an accountant familiar with landlord taxation.