Buy-to-Let Mortgage Calculator
Work out your monthly payment, gross rental yield, interest coverage ratio (ICR), and LTV for a UK buy-to-let property.
Monthly mortgage payment (interest-only)
£859.38
- Annual mortgage interest
- £10,312.50
- Annual rental income
- £15,000.00
- Gross rental yield
- 6%
- Interest coverage ratio (ICR)
- 145.45%
- Loan-to-value (LTV)
- 75%
ICR is the metric UK BTL lenders use to underwrite affordability under PRA Supervisory Statement SS13/16. Most lenders require 125% for basic-rate and 145% for higher-rate taxpayers, stress-tested at a notional rate. Yield is gross — net returns will be lower after costs and tax.
How to use this calculator
Enter the property value, the loan amount, the interest rate, the mortgage term in years, and the monthly rent you expect to receive. Pick interest-only (typical for BTL) or capital repayment. Results update as you type.
How the calculation works
For an interest-only mortgage, the monthly payment is the loan multiplied by the annual interest rate, divided by 12. For a repayment mortgage we use the standard amortisation formula P = L × r / (1 − (1+r)⁻ⁿ), where r is the monthly rate and n is the number of months. Gross rental yield is annual rent ÷ property value. The interest coverage ratio (ICR) is annual rent ÷ annual mortgage interest — the underwriting metric UK BTL lenders use under the Prudential Regulation Authority's standards in SS13/16 (2017). LTV is loan ÷ property value.
Worked example
Property £250,000, loan £187,500 (75% LTV), rate 5.5%, monthly rent £1,250. Interest-only monthly payment = £187,500 × 5.5% ÷ 12 = £859.38. Annual interest = £10,312.50; annual rent = £15,000. Gross yield = £15,000 ÷ £250,000 = 6.0%. ICR = £15,000 ÷ £10,312.50 = 145.5% — just clearing the 145% threshold most lenders apply to higher-rate taxpayers.
Frequently asked questions
What is a good rental yield for a UK buy-to-let?
Most UK landlords target a gross rental yield of 5-8% before costs and tax. Yields above 8% often indicate higher-risk areas or sub-prime tenant pools; below 5% leaves little room once mortgage interest, void periods, repairs, insurance, and management fees are deducted. The figure here is gross — your net yield after costs and income tax will be lower.
What ICR do BTL lenders require?
UK BTL lenders typically require an interest coverage ratio of at least 125% for basic-rate taxpayers and 145% for higher-rate or additional-rate taxpayers, stress-tested at a notional 5.5% interest rate (or two percentage points above the product rate, whichever is higher). The Prudential Regulation Authority introduced these underwriting standards in supervisory statement SS13/16. Many lenders apply 145% across the board to all applicants.
Should I take an interest-only or repayment BTL mortgage?
Most BTL mortgages are taken on an interest-only basis because the property itself is the long-term capital asset and interest-only keeps monthly cash flow stronger. Repayment is more conservative — you build equity each month, but the higher monthly payment compresses yield. This calculator shows both options. It cannot tell you which suits your personal tax position or exit plan; speak to a regulated mortgage broker before you commit.
Does this calculator include stamp duty, agent fees, or income tax?
No. It calculates the mortgage payment and the headline rental metrics only. Stamp Duty Land Tax (with the 5% additional-property surcharge in England), letting agent fees, repairs, insurance, void periods, and income tax all reduce your real return. Treat the gross yield as a ceiling, not a forecast.
How is LTV calculated?
Loan-to-value is the loan amount divided by the property value, expressed as a percentage. Most UK BTL lenders cap LTV at 75-80%; high-LTV BTL lending is rare, and lower LTVs typically unlock cheaper rates and more lender choice.
Is rental income taxed separately from my salary?
No. UK rental profit is added to your other taxable income for the year and taxed at your marginal rate. Since the Section 24 phase-out completed in 2020, individual landlords can no longer deduct mortgage interest as an expense — they receive a 20% basic-rate tax credit instead, which can push some basic-rate taxpayers into a higher band on paper. This calculator shows pre-tax figures only.