Buy to Let Mortgage Calculator

A Buy to Let Mortgage is a financial product that is used for investors who wish to own property with the long-term aim of generating rental yield from the property to cover the expense of the mortgage cost. Once the mortgage has been paid off, the rental yield generated can be a substantial extra income to supplement your earnings. A Buy to Let finance can be arranged as a repayment or interest only and is typically spread over a 20 – 35 year term length.

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.

What does BTL mean in mortgage?

In a mortgage setting, “BTL” refers to “Buy-to-Let.” Mortgages intended especially for those who buy a property with the goal of renting it to renters are known as buy-to-let mortgages. Conventional residential mortgages are designed for properties that the borrower intends to occupy as their primary residence; these mortgages are not the same.

How much deposit is needed for a BTL mortgage?

Generally speaking, a buy-to-let (BTL) mortgage requires a larger deposit than a residential mortgage. The precise sum varies between lenders and may be influenced by the type of property, the borrower’s financial situation, and the lender’s policies.

Is buy to let worth it 2023?

In 2023 or any other year, there are a number of variables to take into account when deciding if investing in buy-to-let (BTL) real estate is worthwhile. These factors include market conditions, personal financial objectives, and unique circumstances.

Can you live in your own buy-to-let?

The majority of the time, a normal buy-to-let mortgage arrangement prohibits you from residing in your own buy-to-let (BTL) property. Purchasers who plan to buy a home with the intention of renting it out to tenants instead of living there as their primary residence are eligible for buy-to-let mortgages. Restrictions on the borrower’s ability to live in the property are frequently included in the terms and conditions of buy-to-let mortgages.

Can I afford a buy-to-let?

A variety of financial considerations must be considered in order to determine whether you can afford a buy-to-let (BTL) property. These criteria include your ability to pay the costs of ownership and maintenance.

Will rent go down in 2024 UK?

Accurately forecasting specific changes in rent rates for a future year, like 2024, is difficult because there are a lot of unknowns and factors to consider. A number of factors, including market-specific, demographic, and economic ones, affect rent costs.

Why can’t I live in my buy to let?

One essential component of the terms and conditions that lenders set for this kind of mortgage product is the prohibition on residing in a property that is financed by a buy-to-let (BTL) mortgage. The main objective of a buy-to-let mortgage is to finance real estate investments made by people who want to buy a property with the intention of renting it out to renters. A BTL mortgage’s conditions are based on the assumption that the property will be rented out and are structured to complement this investment strategy.