A buy-to-let mortgage is priced like any other loan, but lenders decide how much to lend mainly from the rent, not your salary. This calculator does both jobs. It works out the monthly cost, then checks the rent against the cover lenders look for at higher rates.
Interest-only or repayment
On an interest-only mortgage you pay only the interest, so the monthly payment is the loan times the rate, divided by 12. The loan itself is still owed at the end. On a repayment mortgage each payment covers interest and some capital, so the debt is cleared by the end of the term.
Take a £200,000 property with a £50,000 deposit. That is a £150,000 loan at 75% loan to value. At 5.5% over 25 years:
| Interest-only | Repayment |
|---|
| Monthly payment | £687.50 | £921.13 |
| Interest over 25 years | £206,250 | £126,339 |
| Still owed at the end | £150,000 | £0 |
The interest-only figure is simply £150,000 × 5.5% ÷ 12. Interest-only costs less each month but more in total, and you still need a plan to repay the loan.
How lenders test the rent (ICR)
The interest coverage ratio (ICR) is the annual rent divided by the annual interest, worked out at the lender's test rate rather than the rate you will pay. Lenders use the interest-only figure even if you choose repayment.
The Bank of England's Prudential Regulation Authority sets the ground rules in supervisory statement SS13/16. Lenders are expected to allow for a rise of at least 2 percentage points and to assume a rate of at least 5.5% for the first five years, unless the rate is fixed for five years or more. The PRA calls 125% cover the industry standard minimum, and expects lenders to take the landlord's tax into account. That is why higher-rate taxpayers usually face a tougher test. Published lender criteria (2025 to 2026) commonly ask 125% of basic-rate taxpayers and limited companies, and 145% or more of higher-rate taxpayers.
In the example, £1,000 a month is £12,000 a year. Interest at 5.5% is £8,250, so the ICR is 145%. That clears 125% and only just clears 145%. Test it at 6% and the ICR drops to 133%: still a pass at 125%, but a fail at 145%. The stress test table in the calculator shows this for each rate. Read the row nearest your lender's test rate, not just your pay rate.
How much can I borrow on a buy-to-let?
Turn the rent test round and you get the most a lender will lend against the rent:
Maximum loan = annual rent ÷ (required cover × test rate)
| Monthly rent | Max loan at 125%, 5.5% | Max loan at 145%, 5.5% |
|---|
| £750 | £130,909 | £112,853 |
| £1,000 | £174,545 | £150,470 |
| £1,250 | £218,182 | £188,088 |
| £1,500 | £261,818 | £225,705 |
The loan is also capped by loan to value (LTV). 75% is a common ceiling for standard buy-to-let. On a £200,000 property that is £150,000, so you could borrow the lower of that and the rent figure. Some lenders let you top up a rent shortfall with personal income, which SS13/16 allows. Our guide to how lenders calculate ICR goes through more examples, and stress tests explained covers the test rates in detail.
Other UK rules that change the numbers
- Section 24. Individual landlords cannot deduct mortgage interest from rental profit. They get a 20% tax credit instead, which hits higher-rate taxpayers hardest. The Section 24 calculator shows the effect on your tax bill.
- Stamp duty. Buying an additional home in England or Northern Ireland usually adds 5 percentage points to every Stamp Duty Land Tax band. Use the stamp duty calculator to add it to your cash needed.
- Portfolio landlords. With four or more mortgaged buy-to-let properties, lenders are expected to underwrite you as a portfolio landlord and look at the whole portfolio. See portfolio landlord rules explained.
- Consumer buy-to-let. Letting a former home or an inherited property, rather than investing as a business, can make the mortgage a regulated consumer buy-to-let loan.
Remortgaging a buy-to-let
The same calculator works for a buy-to-let remortgage. Enter today's property value, set the deposit so the loan matches what you want to borrow, and enter the new rate. Raising extra money is tested like a new purchase. A straight product switch with no extra borrowing is often tested at a lower rate. The remortgage calculator compares a new deal with your current one, and the buy-to-let remortgage guide covers the process.
Common mistakes
- Checking the rent at your pay rate. A 4.5% two-year fix can be tested at 5.5% or more. Use the stress test rows.
- Forgetting the fee. Adding a product fee to the loan raises the interest and the loan the rent has to cover.
- Treating interest-only as cheap. The monthly cost is lower because none of the debt is being repaid.
- Stopping at the mortgage. Passing the rent test does not mean the deal makes money. Agent fees, voids, repairs and tax all come out of the same rent. The RealYield calculator shows the net yield (before tax) and monthly cashflow.
This guide is for information only and is not financial, tax or mortgage advice. Rates, allowances and lender criteria change, so check current figures on GOV.UK or with your lender, and take independent advice before you act.
