Updated 28 August 2026
Buy to Let Mortgage Calculator UK
Buy-to-let lending is assessed on the rent, not your salary. This calculator runs the two tests that decide whether a deal works: the interest cover ratio a lender applies at a stressed rate, and the actual monthly profit after costs and tax. It also shows the stamp duty surcharge and the gross and net yields you will be asked about.
- ICR stress test
- Gross & net yield
- Section 24 tax impact
- Second-home stamp duty
Buy to let calculator
Does this deal stack up?
Net monthly profit after costs and tax
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Gross yield
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Net yield
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ICR test
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Max loan on rent
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What the ICR test supports
Monthly interest
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Interest-only basis
Return on cash invested
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Profit ÷ total cash in
Where the rent actually goes
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Cash you need to get started
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Stamp duty shown for England and Northern Ireland at additional-property rates. Scotland and Wales differ, so check the stamp duty calculator for those.
The two tests every buy-to-let deal must pass
1. The interest cover ratio
Lenders do not usually care about your salary on a buy to let. They care whether the rent covers the mortgage interest with a margin, at a rate higher than the one you are actually paying. The formula is simple:
ICR = monthly rent ÷ (loan × stress rate ÷ 12)
The required ratio depends on your tax position. Basic-rate taxpayers and limited companies typically need 125%; higher-rate taxpayers usually need 145%; some lenders apply 165% to additional-rate taxpayers. The stress rate is normally the higher of about 5.5% or your product rate plus a margin, though five-year fixes often get a softer stress test, which is why so much buy-to-let lending is written on five-year products.
2. Does it actually make money?
Passing the lender's test and making a profit are different questions. After mortgage interest, running costs, voids and tax, a lot of nominally viable deals return very little. The net yield figure above is the honest one, because gross yield ignores every cost and is mainly useful for comparing properties, not for deciding whether to buy.
Section 24 and why higher-rate landlords do the maths differently
Since 2020, individual landlords cannot deduct mortgage interest from rental income. Instead you pay income tax on the full rent and receive a 20% tax credit on the interest. For a basic-rate taxpayer the outcome is broadly unchanged. For a higher-rate taxpayer it is a significant hit: you are taxed at 40% on income you never actually received, then credited back at 20%.
This is why so many landlords now buy through a limited company, where interest remains a fully deductible business expense and profits are subject to corporation tax. It is not automatically better, because company mortgage rates are higher, there are accountancy costs and extracting profit is taxed again, but at higher-rate exposure the arithmetic often favours it. The calculator above applies the Section 24 treatment to individual ownership.
Costs new landlords forget. The 5% stamp duty surcharge on the whole price, a higher buy-to-let product fee (often 1 to 3% of the loan rather than a flat £999), landlord insurance, gas safety and EICR certificates, EPC requirements, deposit protection, letting agent fees at 10 to 15% of rent, and the cost of the first void period before a tenant moves in.
Buy to let questions, answered
What deposit do I need for a buy to let?
Usually 25% of the property price, giving a 75% loan to value. Some lenders go to 80%, but pricing worsens sharply and the ICR test gets harder to pass because the loan is larger. A 35 to 40% deposit unlocks the best rates and makes the rental cover test comfortable rather than marginal.
What is a good rental yield in 2026?
Gross yields of 5 to 6% are typical across much of England, with northern cities often reaching 7 to 8% and central London frequently below 4%. What matters more is net yield after costs, and whether the rent passes the ICR test at your tax band. A 4% gross yield in the South East will usually fail a 145% ICR test at current rates without a very large deposit.
Why are buy-to-let mortgages interest only?
Because the lending is assessed on rental cover, and interest-only payments keep the monthly cost, and therefore the ICR requirement, as low as possible. It also fits how most landlords operate: holding for capital growth and income, then selling or refinancing rather than repaying capital from rent. See the interest only calculator for what that leaves owed at the end.
Should I buy through a limited company?
It depends on your tax band and how long you plan to hold. Higher and additional-rate taxpayers building a portfolio often find company ownership more efficient because mortgage interest stays fully deductible. Basic-rate taxpayers with one or two properties usually do not benefit enough to justify the higher rates and accountancy costs. Transferring existing properties into a company triggers stamp duty and potentially capital gains tax, so this is a decision to take before you buy, with an accountant.
How much stamp duty do I pay on a buy to let?
In England and Northern Ireland, the standard rates plus a 5% surcharge on every band, applying from £40,000. On a £200,000 property that is £11,500 rather than £1,500. Scotland charges an 8% Additional Dwelling Supplement on the full price, and Wales uses separate higher rate bands starting at 5%. The stamp duty calculator handles all three.