How to Calculate Your Buy-to-Let Mortgage
Understanding your mortgage payments is crucial for successful property investment. A buy-to-let mortgage calculator helps you determine your monthly obligations, compare different mortgage types, and ensure your rental income covers your costs with room for profit.
Our free UK mortgage calculator is specifically designed for property investors. Whether you're purchasing your first buy-to-let property or expanding your portfolio, you can quickly calculate monthly payments, total interest costs, and net rental income after all expenses.
Understanding Mortgage Types
Repayment Mortgages
With a repayment mortgage, you pay back both the capital (loan amount) and interest each month. Your monthly payments are higher, but you gradually build equity in the property and own it outright at the end of the term.
Best for: Long-term investors, building wealth through equity, passing property to heirs
Interest-Only Mortgages
Interest-only mortgages require you to pay only the interest each month. The loan amount (capital) remains unchanged throughout the term, resulting in lower monthly payments but requiring you to repay the full loan at the end or when you sell the property.
Best for: Maximizing cash flow, short-term holds, portfolio expansion, property appreciation strategy
Key Factors in Mortgage Calculations
📊 Property Value & Deposit
Buy-to-let mortgages typically require a 25% deposit, though some lenders offer 75-80% loan-to-value (LTV) mortgages. A larger deposit means lower monthly payments and better interest rates.
💰 Interest Rate
Interest rates vary by lender, LTV ratio, and market conditions. Buy-to-let rates are typically 1-2% higher than residential mortgages. Current UK BTL rates range from 4.5% to 7% (2025).
🏠 Rental Income
Lenders require rental income to be 125-145% of your mortgage payment (stress tested at 5.5% interest). This ensures you can cover payments even if rent drops or interest rates rise.
🔧 Running Costs
Factor in service charges (0.5-1% of property value), property management fees (8-12% of rent), maintenance, insurance, and void periods when calculating your net rental income.
How to Use This Mortgage Calculator
- Enter Property Value: Input the purchase price or current value of the property
- Set Deposit Percentage: Use the slider to adjust your deposit (typically 25-40% for BTL)
- Input Interest Rate: Enter the annual interest rate offered by your lender
- Choose Loan Tenure: Select the mortgage term (typically 20-25 years for buy-to-let)
- Select Mortgage Type: Choose between repayment or interest-only mortgage
- Add Rental Details: Enter expected rental yield and running costs
- Review Results: See your monthly payment, total costs, and net rental income instantly
UK Buy-to-Let Mortgage Requirements (2025)
- ✓ Minimum 25% deposit (some lenders require 40%)
- ✓ Rental income must be 125-145% of mortgage payments
- ✓ Stress tested at 5.5% interest rate
- ✓ Minimum personal income of £25,000-£30,000
- ✓ Maximum age at end of term: 70-75 years
- ✓ Portfolio landlords may face additional criteria
Typical UK Buy-to-Let Costs
| Cost Type | Typical Range |
|---|---|
| Interest Rate | 4.5% - 7% |
| Rental Yield | 5% - 8% |
| Service Charge | 0.5% - 1% per year |
| Property Management | 8% - 12% of rent |
| Maintenance | 10% - 15% of rent |
Frequently Asked Questions
What is the 125% rental coverage rule?
Most BTL lenders require that your rental income is at least 125% of your mortgage payment when stress tested at 5.5% interest. This ensures you can cover payments even if rates rise or rent drops.
Should I choose repayment or interest-only?
Interest-only maximizes cash flow and is popular with portfolio landlords. Repayment mortgages build equity and mean you own the property outright eventually. Choose based on your investment strategy, cash flow needs, and long-term goals.
How much deposit do I need for buy-to-let?
Most lenders require a minimum 25% deposit for buy-to-let mortgages. Some require 30-40%, especially for portfolio landlords or properties in certain locations. A larger deposit gives you access to better interest rates.
What are typical buy-to-let interest rates?
As of 2025, BTL mortgage rates range from 4.5% to 7% depending on LTV, deposit size, and whether it's fixed or variable. Rates are typically 1-2% higher than residential mortgages due to the higher risk to lenders.