Buy-to-Let Calculator

Loan amount

The purchase price less your deposit. A 25% deposit on £250,000 leaves a £187,500 loan.

Monthly mortgage payment

Interest-only: the loan multiplied by the annual interest rate, divided by 12. The balance does not reduce, so the full loan is still owed at the end of the term.

Repayment: the standard capital and interest formula. Payment = L × r ÷ (1 minus (1 + r) to the power of minus n), where L is the loan, r is the annual rate divided by 12 and n is the term in months. Part of each payment reduces the balance; the whole payment is counted in cash flow because it leaves your account each month.

Monthly net cash flow

Rent collected (monthly rent less the void allowance), minus the letting and management fee on that rent, minus service charge, insurance and maintenance, minus the mortgage payment. Annual net cash flow is the monthly figure multiplied by 12. Both are before personal tax.

Rental cover check

Monthly rent divided by the monthly interest on the loan at the stress rate, shown as a percentage. Lenders commonly test against reference levels such as 125% and 145%, depending on the borrower and their tax position. The exact test, stress rate and product rules vary by lender, so treat this as a guide to the conversation, not a lending decision.

A worked example

With the example figures, a £187,500 interest-only loan at 5.5% costs £859 a month. Rent of £1,300 less a 5% void allowance is £1,235 collected; a 10% fee takes £124 and running costs are £175. That leaves about £77 a month, or £926 a year. At a 5.5% stress rate, rent covers interest 151%, above both reference levels.

Want the whole deal, including stamp duty and fit-out? Use the deal analyser, or see how PROXERA Wealth works.