Buy-to-let mortgage calculator
Estimate mortgage payments, rental cover, yield and cash flow—then stress-test the deal before tax.
Plan a buy-to-let mortgage with rent, costs and stress testing
A low mortgage payment does not automatically make a rental property profitable. This calculator connects the mortgage with expected rent, voids, management fees and other operating costs. It then shows yield, pre-tax cash flow and a separate rental-cover stress test.
How the buy-to-let calculation works
Calculate the loan and LTV
Loan = price − depositLTV = loan ÷ price × 100
Calculate the mortgage
Interest-only charges monthly interest. Repayment uses the amortising loan formula across the selected term.
Allow for voids and costs
The void allowance reduces rent before management and other monthly costs are deducted.
Measure returns and cover
The tool calculates yield and cash flow separately from the lender-style ICR stress test.
Interest-only versus repayment buy-to-let
| Feature | Interest-only | Capital repayment |
|---|---|---|
| Monthly payment | Interest only; normally lower | Interest plus capital; normally higher |
| Loan balance | Does not reduce through regular payments | Reduces over the mortgage term |
| End of term | Original capital normally remains due | Balance reaches zero if all payments are made |
| Cash flow | May be higher before tax | May be lower while building equity |
What is ICR in a buy-to-let mortgage?
The interest coverage ratio compares expected monthly rental income with monthly mortgage interest at a stress rate. The Prudential Regulation Authority describes ICR as expected monthly rent divided by stressed monthly interest. The calculator applies the entered threshold to work out the rent required and the loan amount that the entered rent could support mathematically.
ICR = monthly rent ÷ stressed monthly interest × 100Required rent = stressed monthly interest × required ICRThis test is not the same as projected cash flow. ICR uses gross expected rent and stressed interest, while the cash-flow result also allows for voids, management costs, other operating costs and the selected actual mortgage payment.
Worked buy-to-let example
At 5.25%, the interest-only payment is £820.31 per month. With two void weeks, a 10% management charge and £180 of other monthly costs, estimated pre-tax cash flow is about £384 per month. At a 5.5% stress rate and 125% required ICR, required rent is about £1,074 per month. These figures are examples, not a product quote.
Buy-to-let yield formulas
Gross yield
Annual scheduled rent ÷ price × 100
Net operating yield
(Rent after voids − operating costs) ÷ price × 100
Cash-on-cash return
Annual pre-tax cash flow ÷ cash invested × 100
Yield definitions vary between websites and agents. This calculator states exactly which costs are included so comparisons remain meaningful.
Costs and tax the result does not calculate automatically
Buying taxes differ across England and Northern Ireland, Scotland and Wales, and can depend on whether the purchase is an additional property, the buyer’s residence status and other facts. Enter the relevant total with legal, valuation, broker and initial refurbishment costs in the buying-cost field.
The calculator also does not estimate Income Tax or Corporation Tax. HMRC treatment differs between individual landlords and companies, and residential finance-cost relief for individuals has specific restrictions. Use the pre-tax result as a planning figure and obtain advice for your ownership structure.
Frequently asked questions
How is a buy-to-let mortgage payment calculated?
For interest-only, the monthly payment is loan amount multiplied by the annual interest rate and divided by 12. For repayment, the calculator uses the standard amortisation formula so each payment includes interest and capital.
What is the buy-to-let interest coverage ratio?
The interest coverage ratio, or ICR, compares expected monthly rent with monthly mortgage interest calculated at a lender stress rate. A result of 145% means rent is 1.45 times the stressed monthly interest.
Does passing the rental stress test guarantee approval?
No. Lenders set their own stress rates, ICR thresholds, rent assessments, LTV limits and borrower criteria. The result is a planning illustration, not a lending decision or mortgage offer.
What is the difference between gross and net rental yield?
Gross yield divides scheduled annual rent by the purchase price. Net operating yield first subtracts the entered void allowance, management charge and other running costs, but it excludes mortgage payments and tax.
What costs should I include?
Consider letting and management fees, maintenance, insurance, service charge, ground rent, licensing, safety checks, utilities or council tax paid by the landlord and a void allowance. Enter purchase taxes, legal, valuation, broker and refurbishment costs in buying costs where relevant.
Does this calculator include landlord tax?
No. UK tax treatment depends on ownership structure, taxpayer circumstances, deductible expenses and current rules. The cash-flow and return figures are before Income Tax, Corporation Tax and Capital Gains Tax.
What happens at the end of an interest-only mortgage?
The capital balance is not reduced by regular interest-only payments, so the original loan normally remains due at the end of the term. A credible repayment plan is required.
Is this calculator only for the UK?
Its terminology, pounds display and rental-cover explanation are designed for UK buy-to-let planning. The mortgage mathematics is general, but taxes, regulation and lending rules differ by country.
Sources and calculator scope
- Bank of England — Buy-to-let underwriting standards
- MoneyHelper — Buy-to-let mortgages explained
- GOV.UK — Residential landlord finance-cost tax relief
- GOV.UK — Tax and allowable rental expenses
Calculeter is independent and does not provide mortgage, financial, legal or tax advice. Rates and lender criteria change; verify them before making a decision.