Buy to Let Mortgage calculator

A Buy to Let property (sometimes referred to as 'buy to rent' or 'BTL') is a type of property investment, in which the investor becomes a landlord and rents out the property for profit. A Buy to Let mortgage is a loan secured against one of these properties.

Like any form of investment, there's a lot to consider before you make the jump, as there’s no guarantee you will make a profit.

Yes (unless of course you're a cash buyer and don't need a mortgage at all). It's a special type of mortgage based on the fact that you will not be living in the property and so is assessed differently to a normal mortgage. Unlike a residential mortgage, where how much you can borrow is based on your own income (among other things), a Buy to Let mortgage is assessed mainly on how much rent the property can generate.

Unlike a residential mortgage, where the amount you can borrow is based on your salary and your outgoings, a Buy to Let mortgage is assessed on the rental income that the property is likely to generate. Lenders will typically need the rental income to be at least 125% of the monthly mortgage payments (on an interest only basis), or even up to 145%, depending on a lender’s criteria.

Most lenders will also require you to be earning an income yourself. Try the Buy to Let calculator to see how much you could borrow.

A Buy to Let mortgage differs from its residential counterpart in that it is largely assessed on the property's profitability, i.e. how much rent it can generate vs. the cost of the mortgage – rather than on your own personal financial circumstances.

That said, many Buy to Let lenders will require you to have a minimum salary, typically £20,000 or £25,000.

Once approved, your Buy to Let mortgage enables you to rent out the property to tenants, whereas you cannot do this with a residential mortgage.

Other notable differences include:

Interest rates

It's common for the interest rates on buy-to-let mortgages to be higher than residential mortgage rates.

Deposit and property value

The minimum deposit you need to put down for a Buy to Let mortgage is higher than it is for a normal residential loan. Typically, you will be required to cover at least 20% of the property value yourself on a BTL mortgage.

Arrangement fees

Arrangement fees on a BTL mortgage can be higher than on a conventional mortgage. You may also come across more arrangement fees that are calculated as a percentage of the amount you're borrowing, rather than just a flat fee. It is also common for conveyancing costs to be slightly higher for a rental property.

If you're moving home, you may be interested in keeping your current home and transforming it into a property to let – a process sometimes referred to as Let to Buy.

If you decide to move out of the property you're currently living in and intend to rent it out, you'll need a Buy to Let mortgage. One option is to ask your current lender for their consent to let the property out, which might involve a fee or switching your mortgage to a higher rate – not all lenders will allow this.

Alternatively, you can remortgage to a new lender on a Buy to Let deal. If you plan to stick with your current lender, you must inform them that you intend to let your home – failure to do so could be classed as a breach of contract.

If you need to release some equity from your current home to fund a new purchase, you can do so during the remortgage process – provided of course that you have sufficient equity and satisfy the lender's criteria.

You also need to ensure certain things are in place like buildings and possibly landlords insurance, as normal policies don’t cover rental properties.

If you own a property you’re planning to let out, working out how much rent you should charge your tenants isn’t always easy. It can be especially tricky if you’re just starting out as a landlord, or if you’re renting out a property that’s not been on the market for a long time.

Our monthly rent calculator can give you an idea of the typical rent in your area. Although our rental price calculator serves as a good guide, it’s important to bear in mind that the actual amount you’ll be able to charge will depend on several different factors. For example; is it close to public transport, schools, shops, and parks? The closer you are to amenities, the more your property is likely to appeal to tenants.

You’ll also need to decide whether you’re going to let out the property furnished or unfurnished. If you’re including all appliances and it’s fully furnished, you may be able to charge a slightly higher rent than if you’re letting it completely unfurnished.

As well as checking our rent per month calculator, it’s a good idea to talk to local letting agents to get a feel for the rental market in the area, and to see how much landlords letting out comparable properties are charging.

Our rental valuation calculator is based on last known rental prices sourced from industry data and inflation figures but we still recommend getting a professional valuation to use for sale, purchase or letting a property.

When deciding the rental value of your property, you’ll need to make sure that the rent you charge will not only cover your Buy to Let mortgage repayments, but also that it covers your other costs such as maintenance, insurance and any agent fees. Buy to Let mortgage lenders will usually want the rent you charge to cover at least 125% of the mortgage payments.

The L&C rental property calculator can give you an idea of how much you should be able to charge based on your address and postcode. You should always do your own research too, asking letting agents about typical rents charged and checking out property websites such as Zoopla and Rightmove can be a good place to start.

And don’t forget you’ll need to arrange a Buy to Let mortgage if you’re planning to rent out a property. You can use our rental mortgage calculator to get an idea of how much you can borrow, then get in touch with our expert advisers for fee free, expert mortgage advice. We’ll support you at every step of the way, from finding the best deal for you, to keeping you updated about your application’s progress.

Our calculator will give you a good idea of how much rent you might be able to charge, but it’s worth doing your own research, too. Look into what the standard rent is in your area, taking into account the types of properties and amenities. A house with a garden, for example, will typically be able to command a higher rental price than a flat in the same area. You can also speak to local letting agents to get a better feel for the local market, particularly if you’re a first-time landlord or are new to the area.