Buy-To-Let Rent Calculator
A Buy-to-Let Rent Calculator helps landlords estimate the minimum rent needed for a property to meet a lender’s requirements for a buy-to-let mortgage. It considers several important factors:
1. Stress Test Rate
- This is an assumed interest rate used by lenders to ensure affordability under potential rate increases.
- Often higher than the actual interest rate, typically 5-7%.
- Helps evaluate if rental income can cover mortgage payments even in worse-case scenarios.
2. Minimum Monthly Rent Requirement
- The rent landlords need to charge for their property to meet the lender’s stress test.
- Calculated using the loan amount, stress test rate, and Interest Cover Ratio (ICR).
3. Interest Cover Ratio (ICR)
- Expressed as a percentage (e.g., 125%-145%), it shows how much rental income must exceed mortgage interest payments.
- Higher for higher-rate taxpayers due to reduced tax relief on mortgage interest.
The figures provided by this calculator are for illustrative purposes and actual figures would depend on your situation and circumstances. Please connect with the expert mortgage advisors we work with to discuss further.
