Calculate Your Buy to Let Investment
Your Buy to Let Results
Monthly Payment
Rental Yield
Monthly Profit
Cash on Cash Return
Detailed Breakdown
How to Use This Buy-to-Let Calculator
Follow these 5 simple steps to calculate your buy-to-let investment returns. Our calculator provides comprehensive analysis of mortgage payments, rental yields, cash-on-cash returns, and investment viability for UK property investors.
Enter Property Value and Deposit
Start by entering the property purchase price (e.g., £250,000) and your deposit amount. For buy-to-let mortgages, most UK lenders require a minimum 25% deposit, though some accept 20%. Higher deposits (30-40%) typically secure better interest rates and lower monthly payments. For example: £250,000 property with £62,500 deposit (25%) = £187,500 mortgage at 75% LTV. The calculator automatically calculates your loan-to-value (LTV) ratio, which is crucial for BTL mortgage approval.
💡 Deposit Tip: Aim for 25-30% deposit for best BTL mortgage rates. Higher deposits reduce LTV, lower interest rates (typically 0.5-1% lower per 10% LTV reduction), and improve rental cover ratio (ICR) calculations. For £250k property: 25% deposit (£62.5k) = 75% LTV, 30% deposit (£75k) = 70% LTV (better rates). Use our Deposit Calculator to plan savings.
Enter Interest Rate and Mortgage Term
Input your BTL mortgage interest rate (e.g., 5.5%) and term (typically 25 years). UK buy-to-let mortgage rates in October 2025 range from 4.5-6.5% depending on LTV, deposit size, and lender. Lower LTV (60-70%) = better rates (4.5-5.5%), higher LTV (75-80%) = higher rates (5.5-6.5%). Most BTL investors choose interest-only mortgages to maximize monthly cashflow, though repayment mortgages build equity. Example: £187,500 mortgage at 5.5% interest-only = £859/month, repayment = £1,150/month.
⚠️ Interest Rate Warning: BTL mortgage rates are typically 1-2% higher than residential mortgages. Lenders stress test at 5.5-6.5% to ensure affordability if rates rise. Current average BTL rates (October 2025): 75% LTV = 5.0-5.5%, 70% LTV = 4.5-5.0%, 65% LTV = 4.5-5.0%. Fixed rates (2-5 years) offer stability, tracker rates follow Bank of England base rate. Always factor in potential rate increases when calculating investment viability.
Enter Expected Monthly Rental Income
Input the expected monthly rental income based on current market rates in your target area. Research comparable properties on Rightmove, Zoopla, or consult local letting agents for accurate rental valuations. For example: 2-bed flat in Manchester city center = £1,200/month, 3-bed house in Birmingham suburbs = £1,100/month, 1-bed flat in London Zone 3 = £1,500/month. The calculator uses this to calculate gross rental yield (annual rent ÷ property value × 100) and rental cover ratio (ICR) for mortgage approval.
💡 Rental Income Tip: Most BTL lenders require rental income to be 125-145% of mortgage payment (Interest Coverage Ratio). For £859/month mortgage payment: 125% ICR = £1,074/month rent minimum, 145% ICR = £1,246/month rent minimum. Higher LTV or portfolio landlords (4+ properties) face stricter 145% ICR requirements. Use our Rental Cover Ratio Calculator to check ICR compliance.
Enter Monthly Expenses
Input all monthly property expenses for accurate net yield calculation. Typical BTL expenses include: property management fees (10-15% of rent, e.g., £120-180/month on £1,200 rent), landlord insurance (£30-80/month), maintenance reserve (10-15% of rent, £120-180/month), ground rent (leasehold properties, £20-100/month), service charges (flats, £50-200/month), void period allowance (5-10% of rent, £60-120/month). Example total: £200-400/month depending on property type and management approach.
✅ Expense Breakdown: Property Management: 10-15% of rent (£120-180/month on £1,200 rent) or self-manage to save. Insurance: £360-960/year (£30-80/month) for buildings, contents, landlord liability. Maintenance: 10-15% of rent reserve (£120-180/month) for repairs, boiler servicing, safety certificates. Void Periods: 5-10% of rent (£60-120/month) for tenant turnover. Total: £330-560/month typical expenses on £1,200 rent.
Review Your Investment Results
Click "Calculate Investment" to view comprehensive results including: (1) Monthly Mortgage Payment (interest-only or repayment), (2) Gross Rental Yield (annual rent ÷ property value × 100, target: 5-8%), (3) Monthly Profit (rent minus expenses minus mortgage payment, target: positive cashflow), (4) Cash-on-Cash Return (annual profit ÷ deposit × 100, target: 6-12%). The calculator also shows annual breakdown, LTV ratio, and rental cover ratio (ICR) for mortgage approval. Use these metrics to assess investment viability and compare properties.
⚠️ Investment Viability Criteria: Good BTL Investment: Gross yield 5-8%, net yield 3-6%, positive monthly cashflow, cash-on-cash return 6-12%, LTV ≤75%, ICR ≥125-145%. Warning Signs: Gross yield <5%, negative cashflow, cash-on-cash return <4%, LTV >75%, ICR <125%. Example Good Investment: £250k property, £1,200 rent (5.76% gross yield), £200 expenses, £859 mortgage = £141/month profit, 2.7% cash-on-cash return on £62.5k deposit. Factor in capital growth (3-5%/year) for total returns.
Important Buy-to-Let Investment Reminders
- Minimum Deposit: 25% deposit required by most BTL lenders (some accept 20%). Higher deposits (30-40%) secure better rates (0.5-1% lower per 10% LTV reduction). Budget for deposit plus stamp duty (3% surcharge on additional properties), legal fees (£1,000-2,000), surveys (£400-1,000), and arrangement fees (£0-2,000).
- Rental Cover Ratio (ICR): Lenders require rental income to be 125-145% of mortgage payment. Higher LTV (75-80%) or portfolio landlords (4+ properties) face stricter 145% ICR. Stress tested at 5.5-6.5% rates regardless of actual rate. Ensure rental income meets ICR requirements for mortgage approval.
- Tax Implications: Pay income tax on rental profits (20-45% depending on tax band). Section 24 restricts mortgage interest relief to 20% for individual landlords. Capital gains tax (18-28%) on property sales. Consider limited company structure for 4+ properties (19-25% corporation tax, full mortgage interest relief). Consult tax advisors.
- Void Periods & Expenses: Factor in 5-10% void periods between tenants (£60-120/month on £1,200 rent). Budget for maintenance (10-15% of rent), insurance (£30-80/month), management fees (10-15% if using agents), safety certificates (£150-300/year), and unexpected repairs. Realistic expense budgeting essential for accurate returns.
- Professional Advice: This calculator provides estimates only. For personalized advice, consult FCA-regulated mortgage brokers for BTL lending, chartered accountants for tax planning, and property investment specialists for market analysis. Always conduct thorough due diligence before investing.
FCA Compliance Notice
This calculator provides buy-to-let investment estimates for informational purposes only. It does not constitute financial, investment, mortgage, or tax advice. Buy-to-let property investment is subject to complex regulations including FCA mortgage lending rules, HMRC tax requirements, and landlord licensing obligations. Actual investment returns depend on individual circumstances including property location, tenant quality, market conditions, interest rate changes, void periods, maintenance costs, and tax position. BTL mortgages require minimum 25% deposit (some lenders 20%), rental income to be 125-145% of mortgage payment (Interest Coverage Ratio), and stress testing at 5.5-6.5% rates. Tax implications include income tax on rental profits (20-45%), Section 24 mortgage interest restrictions (20% relief for individuals), capital gains tax on property sales (18-28%), and stamp duty surcharges (3% additional properties). Limited company structures offer different tax treatment (19-25% corporation tax, full mortgage interest relief) but involve higher setup costs, accounting fees, and dividend tax on profit extraction. Property values, rental income, and expenses can fluctuate significantly based on market cycles, economic conditions, and local factors. Landlord responsibilities include property maintenance, safety compliance (gas/electrical certificates, EPC ratings, smoke/CO alarms), tenant deposit protection, and adherence to Housing Act regulations. Always consult FCA-regulated mortgage advisors for BTL lending, chartered accountants for tax planning, and property investment specialists before making investment decisions. MortgagePro.uk is a comparison tool and not a financial advisor, mortgage lender, tax advisor, or investment advisor.
Understanding Buy to Let Investment
Key Metrics
- Rental yield measures annual rental income vs property value
- Cash-on-cash return shows annual profit vs deposit invested
- LTV ratio indicates leverage and lending risk
- Monthly cashflow shows ongoing profitability
- Good rental yields typically range from 5-8%
Investment Costs
- Minimum 25% deposit for buy-to-let mortgages
- Higher interest rates than residential mortgages
- Stamp duty surcharge of 3% for additional properties
- Legal fees, surveys, and arrangement costs
- Ongoing maintenance and management expenses
Maximizing Returns
- Research high-demand rental areas
- Consider properties near transport links
- Factor in capital growth potential
- Professional property management can help
- Regular rent reviews to maintain yields
Important Considerations
- Void periods between tenants affect returns
- Tax implications on rental income and capital gains
- Mortgage stress testing at higher rates
- Landlord responsibilities and regulations
- Property insurance and safety requirements
Frequently Asked Questions
Essential information about buy-to-let mortgages and property investment in the UK
What deposit do I need for a buy-to-let mortgage?
Most lenders require a minimum deposit of 25% of the property value for buy-to-let mortgages, though some may accept 20%. Higher deposits typically secure better interest rates. The larger your deposit, the lower your loan-to-value ratio and monthly payments.
How is rental yield calculated and what's considered good?
Rental yield is calculated by dividing annual rental income by property value, then multiplying by 100. A gross yield of 5-8% is typically considered good, but this varies by location. Net yield (after expenses) of 3-6% is more realistic and useful for investment decisions.
What expenses should I factor into my calculations?
Consider mortgage payments, insurance, letting agent fees (typically 10-15%), maintenance costs, void periods, landlord safety certificates, and potential capital gains tax. Also factor in income tax on rental profits and any management fees if using a property management company.