0116 464 5544

Buy to Let Mortgage Calculator


UK Property Finance provides a complete range of brokerage services for existing landlords and prospective buy-to-let investors. Our exclusive buy-to-let calculator makes it quick and easy to work out your ideal loan or mortgage at the touch of a button.

How Are Buy-to-Let Mortgages Calculated?

Buy-to-let (BTL) mortgages are calculated in roughly the same way as conventional mortgages. This means that as a rule of thumb the most affordable buy-to-let mortgages are those that have the lowest loan to value (LTV).

BTL mortgages are usually arranged on an interest only basis however when arranged as a capital and interest/repayment mortgage, the chosen term can make a huge difference on the overall amount repaid.  For example, if you were to borrow 60% of the property’s value (with a 40% deposit) and repay the loan over five years, you would pay considerably less overall than on an 85% LTV mortgage repaid over 20 years. Your credit history and current financial position may also influence the loan’s interest rate and borrowing costs.

How Much Can I Borrow with a Buy-to-Let Mortgage?

There are technically no limitations to the amount you can borrow with a buy-to-let mortgage. It is however normal for lenders to require a minimum monthly rental income equivalent to 125% of the monthly mortgage interest only repayments on the loan. This can be as high as 150% with certain lenders though can be closer to 100% with others.

Your eligibility (and the total amount you can borrow) can also be influenced by your financial status at the time of your application and your recent credit history.

How Much Does a £100,000 Buy-to-Let Mortgage Cost?

The overall costs of a £100,000 buy-to-let mortgage will be determined by the size of the deposit you offer, the length of the repayment period and your financial circumstances at the time of your application. Assuming you chose a 25-year mortgage with an initial 1.39% APR fixed for two years and an LTV of 60%, borrowing costs (including an initial arrangement fee of £1,500) would be approximately £9,624 over the two-year term on a repayment basis or £2,822 on an interest only basis.

What Is a Good Return on a Buy-to-Let Mortgage?

It is entirely up to you to determine what represents a good return on any buy-to-let mortgage taken out. Some investors are happy simply to cover the mortgage payments on their buy-to-let properties while others are only satisfied when their portfolio generates significant profits.

How Do I Calculate Rent Yield?

Rental yield is calculated by dividing the annual rent of the property by the property’s value X100:

  • Rental yield = (Annual rent / property value) x 100

In a working example, if you were to charge £860 per month on a property with the value of £250,000, this would lead to a rental yield of 4.16%.

Why Should I Calculate Returns?

Working out your rental yields is important to ensure you are making the right decisions to safeguard your financial future. Not all buy-to-let properties generate the revenues their owners expect. If your property portfolio is not generating a healthy return, you may wish to consider alternative investment ideas.

What Kind of Return on My Investment Should I Be Aiming for?

This is something that differs significantly from one investor to the next. It is entirely up to you to determine what kind of return on your investment you are happy with. For an indication of the kinds of the returns being generated across the UK, the more profitable 25 regions for buy-to-let generate approximate returns for investors of between 7% and 12% based on rental yield.

How Can I Find the Best Buy-to-Let Mortgage?

Our exclusive buy-to-let calculator can be great for exploring the available options and deciding which type of buy-to-let mortgage works for you. It is then a case of comparing the market to find the best possible deal from an extensive panel of specialist lenders.

Whether you are ready to purchase or simply considering a buy-to-let investment, we are standing by to take your enquiry. Contact a member of the team at UK Property Finance anytime to discuss your requirements in more detail.

Last Updated: Dec 5, 2019 @ 10:11 am
NACFB

UK Property Finance is Authorised by The Financial Conduct Authority (FCA)

Association of Bridging Professionals