Buy to Let Mortgage Calculator
Estimate buy-to-let mortgage payments, loan-to-value, gross rental yield and the rental cover test, plus the largest loan your rent could support.
Reviewed by Dany, RightSums team · Updated
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personal-finance · Daily life · UK
Enter the property price, deposit, interest rate and expected monthly rent, then choose interest-only or repayment. The calculator shows the monthly payment, loan-to-value and gross rental yield. It also runs the rental cover test lenders use: the rent divided by the monthly interest at a higher stress rate, compared with the ratio you enter. You set both the stress rate and the ratio, because each lender picks its own. The Bank of England's PRA asks lenders to allow for a rise of at least 2 percentage points, with a floor of 5.5% unless the rate is fixed for five years or more. It is an estimate only and ignores fees, letting costs, voids and tax.
Accepted inputs
- Property price
- Deposit
- Interest rate
- Mortgage term
- Interest-only or repayment
- Monthly rent
- Stress rate
- Required rental cover ratio
Outputs
- Monthly mortgage payment
- Loan-to-value
- Gross rental yield
- Rental cover (ICR) at the stress rate
- Rent needed to pass
- Largest loan the rent supports
How to use the Buy to Let Mortgage Calculator
- Enter the property price, your deposit, the interest rate, the term and the rent you expect each month.
- Choose interest-only or repayment, and the calculator works out the monthly payment, the loan-to-value and the gross rental yield.
- For the rental cover test it divides the monthly rent by the interest the loan would cost at the stress rate you enter, and compares that with the ratio you enter.
- It also shows the rent you would need to pass and the largest loan the rent supports at those settings, which is the annual rent divided by the ratio times the stress rate.
Frequently asked questions
How much can I borrow on a buy to let mortgage?
Most lenders cap the loan at what the rent covers. With rent of £1,200 a month, a 7% stress rate and a 125% cover ratio, the most the rent supports is £14,400 ÷ (1.25 × 0.07) = £164,571. Your lender's own rates and ratios may give a different figure.
What is the interest cover ratio for buy to let?
It is the monthly rent divided by the monthly interest at a stress rate. On a £187,500 loan at 7%, interest is £1,093.75 a month, so £1,200 rent gives 109.7%. The PRA describes 125% as the current industry standard, but lenders set their own figure.
What stress rate do buy to let lenders use?
Each lender chooses, within PRA rules. Supervisory statement SS13/16 asks lenders to allow for a rise of at least 2 percentage points and to assume at least 5.5% for the first five years, unless the rate is fixed for five years or more. So a 5% deal is usually tested at 7% or more.
How much is a buy to let mortgage a month?
On interest-only, it is the loan times the rate divided by 12. A £250,000 property with a £62,500 deposit leaves a £187,500 loan, which at 5% costs £781.25 a month. On repayment over 25 years the same loan costs £1,096.11 a month.
How do I work out rental yield?
Divide the annual rent by the property price and multiply by 100. Rent of £1,200 a month is £14,400 a year, so on a £250,000 property the gross yield is 5.76%. Gross yield ignores costs such as letting fees, repairs, insurance and empty months.
Sources
The rates and rules in this tool come from:
- Bank of England: Underwriting standards for buy-to-let mortgage contracts
- CFPB: What is a monthly mortgage payment en 1941
- CFPB: How do mortgage lenders calculate monthly payments en 1965
- Justice Laws (Canada): Interest Act
- Financial Consumer Agency of Canada: Mortgage terms amortization
- Financial Consumer Agency of Canada: Down payment
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