How Much Rent Do I Need for a Buy to Let Mortgage?
Buy to let mortgages are calculated using the rental income, either actual or proposed.
So if you know what a property can be rented for, then our calculator will give you a rough guide to what you could borrow.
Please remember that this is not an accurate quotation and figures must be used as a guide only. Your mortgage broker will be able to provide you with a personalised illustration.
What is the minimum monthly rent requirement?
This is the gross (before any deductions or tax) monthly rental figure that the lender needs you to achieve to be granted the loan required.
What is a Stress Test Rate?
This is the interest rate used for the mortgage calculation. Lenders will stress test applications against rates of 5.0% or 5.5% to protect against future interest rate rises.
What is the Interest Cover Ratio?
Affordability for buy-to-let mortgages is typically assessed by using an interest coverage ratio (ICR). This is the ratio of gross rental income to mortgage interest repayments.
Lenders use 125%/145% calculated using a stressed interest rate (stressed ICR). A stressed ICR of 125% reflects the amount of gross rental income required for landlords to breakeven, factoring in the costs of mortgage repayments (including an increase in interest rates), tax and property maintenance. This calculator assumes an Interest Cover Ratio of 125%.
Don’t forget about stamp duty
There is additional tax to pay for second properties, including buy to lets, holiday lets and holiday homes. Use our Stamp Duty Calculator to see what it may cost.
