All About Buy-to-let Mortgage Calculator

Feb 18, 2024 By Susan Kelly

There is a direct correlation between the loan-to-value ratio (LTV) and the interest rate on a buy-to-let mortgage. The most cost-effective buy-to-let mortgages often have a loan-to-value (LTV) ratio of 60% or less and a shorter term (to prevent the borrower from paying the lender's normal variable rate.

Mortgages for investment properties carry more risk for lenders than for primary residences. As a result, the interest rate on a buy-to-let mortgage will likely be greater than that of a primary residence loan, and a 20% down payment is likely required.

Can I benefit from consulting a mortgage broker?

As well as facilitating your access to mortgage products and rates that aren't generally available to the general public, mortgage brokers can save you time and effort in the application process. The FCA mandates certain education and experience requirements for anyone who wishes to practice as a mortgage broker.

Get in touch with a mortgage broker who has won awards today. According to, MAB is the best mortgage broker to work with. is where you can get free, friendly, experienced advice from financial professionals.

If you're looking for mortgage advice and have found Moneyfacts, you may phone the Mortgage Advice Bureau at 0808 149 9177 at no cost to you. In addition, the Mortgage Advice Bureau may charge you up to 1% more if you try to reach them through any other means. Assuming there are no bank holidays between those times, calls will be answered from 8:00 am to 8:00 pm Monday through Friday and from 9:00 am to 1:00 pm on Saturday. A call recording may be made.

What is the maximum amount I can borrow for a buy-to-let property?

As a general rule, mortgage companies will only provide you with a loan if your monthly rental revenue exceeds 125% of your mortgage or interest payment. With some lenders, the minimum required rental income might be over 145%. This is because lenders will use a managed rate instead of your actual mortgage product rate when determining your monthly buy-to-let mortgage payment, typically 5.5%. Your annual income must be over the minimum wage stipulated by the lending institution.

Can I get a decent rate of return with a buy-to-let loan?

There are three methods to determine if the return on your real estate investment is sufficient. Those are the yield on rentals, ROI, and COC. How can you determine how much money you'll make by renting a property? The rental yield is calculated by multiplying the investment property's annual rent by the ratio of its value to rent. The yield on investment in rental property is calculated as follows:

How does one determine the profitability of a certain investment?

You can determine your ROI by dividing your net profit after tax and expenses by your total investment cost. Next, we multiplied that number by 100 to get a percentage. It's important to note that this formula is oversimplified and not exclusive to buy-to-let properties.

For buy-to-let investors: figuring out your cash-on-cash returns. With this method, you can determine how much money you would have to invest to cover your monthly mortgage payment. A company's cash-on-cash return can be calculated as follows:

The total amount of cash invested is the sum of the down payment required for the mortgage, the cost of any improvements made to the property, and any other associated fees.

Annual rental income minus annual mortgage payments equal annual net cash flow. Say, for illustration purposes, you put down £50,000 on a buy-to-let mortgage and spend another £10,000. You've put in a total of £60,000. You have a buy-to-let mortgage at £350 a month and rent of £860. In a yearly sense, you bring in a net of £6120. You may expect an 11.4% return on your investment based purely on cash flow.

Why is it crucial to figure out your return on investment?

How much profit should you expect from a rental property? There is no universally accepted definition of a "good" rental yield because property prices and the state of the rental market affect it differently in different regions. Between 6.99% and 10% is the average rental yield in the UK's top 25 areas. The 2019/2020 Buy-to-Let Yield Map from Totally Money.

For investment purposes, what is the best mortgage product to use?

Your ideal buy-to-let mortgage will rely on your personal and property details. Some buy-to-let mortgages may require previous landlord experience rather than just being a first-time landlord. Some financial institutions will only finance homes with peculiar features, such as flat or thatched roofs. In contrast, others may have restrictions on buildings owned by the government or located atop businesses. Many dwellings or multiple occupants are another risk factor for some lenders.

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