Buy to let
Use our efficient calculator to determine how much you could borrow for a BTL property.
Getting started with our buy to let
Our free buy to let calculator gives you quotes for BTL mortgage interest rates, monthly repayments and lender fees using basic information such as property value, monthly rent, and how much you want to borrow. It’s an essential tool if you’re looking to purchase or remortgage an investment property.
Let’s find a buy to
Our easy-to-use buy to let mortgage calculator lets you find a mortgage rate and tells you how much your monthly repayments will be. All you have to do is give us a few details.
Secure your buy to let mortgage in 5 steps
Step 1: Get an idea with our buy to let calculator
Use our calculator to get an idea of the type of mortgage rate you could secure. Submit a quote, and one of our BTL brokers will call you and complete a more in-depth search for you on our bespoke BTL mortgage sourcing system.
Step 2: Secure an agreement in principle (AIP)
Speak to one of our knowledgeable brokers next, as they’ll need some more information to ensure we can secure the most suitable deal and get you that all-important AIP.
An AIP, or decision in principle (DIP), gives you a solid idea of how much you can borrow, the type of mortgage interest rates you can access and whether a lender will accept your application at all.
We can help you secure an AIP, and once you’ve found a buy to let property to purchase you can also use it to show estate agents and vendors that you’re a serious and creditworthy candidate.
Step 3: Application process
Once you’ve found a property, we can start the formal buy to let mortgage application process. This is when we’ll need to collect documentation from you, including:
- 3-6 months of bank statements
- Proof of identity (ID) such as a valid passport or driver’s licence
- Proof of income
Once we submit to your chosen lender, an underwriter will review your application and a surveyor will value the property. If everything meets expectations, we’d expect the lender to issue your formal mortgage offer within 4 to 6 weeks from application.
Step 4: Conveyancing
With your mortgage offer secured, your solicitor can begin the necessary searches and legal paperwork. Your dedicated MFB Client Relationship Manager will stay in touch with them to make sure everything is proceeding smoothly and help resolve any issues should they occur. Your solicitor will let you know when to pay your deposit.
Step 5: Completion
Once you’ve paid your deposit and all the legal work is complete, your solicitor will instruct your lender to release the funds. Congratulations – you now own a new buy to let property!
Frequently asked buy to let questions…
Do I need a buy to let mortgage to rent out a property?
Yes, you will need a buy to let mortgage in place to let out your property to tenants. If you’re letting out your property whilst on a residential mortgage without your lender’s consent, you may be in breach of your mortgage conditions. Get in touch with one of our expert brokers to discuss your options
How much deposit do you need for a buy to let mortgage?
Lenders typically prefer borrowers to put down a 25% deposit for a buy to let mortgage application. It’s possible to get a buy to let mortgage with a deposit of just 15%, however, there are very few products in this bracket, and the interest rate is likely to be more expensive. On the whole, rates become much more competitive when you can put down a deposit of 25% or more.
What is the difference between a buy to let mortgage and a residential mortgage?
A residential mortgage is a loan secured on a property for you to live in, whereas a buy to let mortgage is a loan secured on a property you let out or rent to tenants Buy to let mortgages tend to incur higher fees, and mortgage interest rates are typically higher as well, as they are more specialist mortgage products.
Furthermore, buy to let is not a regulated industry, whereas residential mortgages are. As such, you only have access to the Financial Services Ombudsman and Financial Services Compensation Scheme when applying for a mortgage for your own home. This is because buy to let mortgages are considered to be business transactions, and therefore are not eligible for the FCA’s consumer regulations.
How are buy to let mortgages calculated?
While every mortgage lender will have their own criteria for determining how much you can borrow, they all look at the following key factors when calculating a buy to let mortgage:
- Loan to Value (LTV)
This is how much you are borrowing expressed as a percentage of the property value. Generally speaking, a lower LTV gives you access to more competitive mortgage interest rates and a higher LTV reduces the number of lenders available to you and usually increases the rates.
The majority of buy to let lenders cap their maximum loan amount to 75%. This means that even if you meet affordability criteria to borrow more, the most amount of funding you could access will still be up to 75% of the property value.
- Rental Income
Buy to let properties should be self-funding and your mortgage product should be affordable for your current circumstances. As such, the rental income should cover the mortgage interest repayments plus any additional costs associated with running the property.
When lenders are stress-testing your affordability, they will typically use a ICR of 145% at payrate (the mortgage rate) for individual borrowers and 125% for Limited Companies.
What is a rent-to-interest (RTI) calculation?
Rent to interest (RTI) is also known as interest coverage ratio (ICR), debt service cover (DSCR) or “stress test”. Different lenders use different terms, but they all mean the same thing.
Buy to let mortgage lenders use this calculation to ensure the expected rent will cover the mortgage interest and other costs associated with running your BTL property.
Here’s an example of how RTI works: You rent a property for £1,500 per calendar month, which you own in your personal name. A lender will stress test this monthly rent at 145% at a 5-year fixed interest rate of 5.5%*, meaning you could borrow a maximum of £225,705.
Comparatively, if you owned the property in a Limited Company, the calculation would be 125% at 5.5%*, meaning you could borrow a maximum of £261,818.
However, whether you invest in your personal name or via a Limited Company is not the only factor lenders consider for RTI calculations. Whether you’re a basic or higher rate taxpayer, the type of property you’re mortgaging, and your background property portfolio also impact the calculation.
As each lender uses a slightly different calculation, you may be able to borrow more from one and not another. That’s why using our team of expert brokers is so valuable – we do all this time-consuming comparison work for you!
*Rates are for illustrative purposes only and may vary.
What is top slicing?
Some lenders can allow top slicing to help with affordability calculations. This is when personal income or rental income from your background portfolio is used to boost the RTI calculation and will enable you to borrow more than if you relied on just the property’s monthly rental income. Not all lenders offer this, but our knowledgeable team can help you find the lenders that do if you need it.
How to compare BTL mortgage offers
There are three main things to consider when comparing buy to let mortgages, and the headline interest rate isn’t one of them!
Criteria – lender criteria vary enormously, so while you might be a textbook applicant for one, another wouldn’t even consider you! That’s why it’s best to start with the buy to let lenders that will consider you before you even think about mortgage interest rates.
Cost – the true cost of the mortgage is more important than the interest rate. While one product may have the lowest interest rate, it might have higher arrangement fees or additional fees that make it more expensive than a product with a slightly higher interest rate. Our bespoke buy to let mortgage sourcing system makes it easy for us to compare these costs for you.
Hidden fees – although less common now, some mortgages have quirky additional terms, such as exit charges beyond the initial fixed-rate period. Our mortgage experts will explain everything clearly and ensure you understand their recommendation before proceeding. Still, you and your solicitor must read over all the mortgage documentation before signing the mortgage offer.
How long should you borrow for?
Most BTL mortgage terms are 25 years, but this will depend on the age you are when you apply or the age you’ll be when the mortgage term ends, as some lenders have restrictions around this. Your plans for the property will also influence how long you borrow for.
A shorter mortgage term will reduce the amount of interest you pay on the capital loan. Our experienced buy to let brokers can help you determine what’s best for your circumstances.
Capital or interest-only repayments?
Capital and interest repayments mean that each month, you repay part of the primary loan (the capital) and the interest charged by the lender.
Interest-only repayments are when you only repay the interest charges every month. This means the capital loan does not decrease over time.
Most landlords opt for interest-only buy to let mortgages, as it makes monthly repayments smaller, which can be better for cash flow. Your lender will need to know how you intend to repay the capital loan at the end of the mortgage term when you apply for the interest-only mortgage. Typically, landlords will sell the property or use proceeds from the sale of another property to repay the capital at the end of the mortgage term.
Lenders do offer capital and interest repayments for buy to let mortgages. Our experienced buy to let brokers can talk you through the options to help you decide the best repayment structure for you.
Should I get a fixed or variable rate?
Whether you get a fixed or variable mortgage rate is a personal preference, but we can help you decide.
Many BTL investors prefer fixed rates as your monthly repayments will not change during the initial fixed-rate period (e.g., 2 or 5 years), which helps to budget. However, if interest rates decrease during that period, you can’t take advantage of the reduced rates.
Variable or tracker mortgage rates are set by the lender. These usually track the Bank of England Base Rate or the lender’s standard variable rate (SVR). If interest rates change, your monthly repayments will change. So, one month, you could pay more than the month before, and the next, less.
How many buy to let mortgages can I have?
Technically, there is no limit. However, lenders do have limitations on:
- The amount of borrowing across your portfolio (either with them or with other lenders)
- The number of mortgaged properties you have in the background (either with them or with other lenders)
- The total loan to value (LTV) across your portfolio
Essentially, the more mortgages you have, the greater the total debt you owe and, therefore, the higher your risk as a borrower. Our expert broker team know which lenders have which limits and what they are, so we can help you find the right lender.
Talk to an expert
Have all the facts and figures you need to purchase or remortgage your home? Our experts will make the whole process easier for you! Give us a call or choose a convenient time for us to call you. Drop us an email or chat with a human on our live chat.