Buy to Let Mortgages Calculator
NEW!! Instant and Advanced Buy to Let Mortgages Calculator
Try our new Instant and Advanced Buy to Let Mortgage Calculator which takes your circumstances and requirements then searches through the latest buy to let mortgage rates to find the most suitable buy to let mortgages for you.
Alternatively, the buy to let mortgage calculator on the right will provide you with an illustration of your monthly mortgage repayments over a given period, at a specified interest rate based on either an interest only or repayment (capital and interest) basis.
Please note most property investors and landlords choose interest only terms, so do bear this in mind when using the calculator.
How to use the buy to let mortgage calculator:
1. Choose either repayment or interest only
2. Loan Amount: Enter the amount of money you wish to borrow.
Eg: If you want to borrow £120,000 enter 120000 into the box.
3. Term (years): For how long do you wish to borrow the money?
Eg: 10 years? 15 years? 20 years? Enter the number of years to suit you.
4. Interest rate: To give you an idea of the current interest rates available,
please look at the latest best buy tables, then enter your chosen interest
rate. (i.e. 4.99 - the "%" sign is not required).
5. Click on the submit button. The answer will tell you how much you will have
to repay each month.
How to calculate the amount of rent you will need:
Now that you have your monthly buy to let mortgage repayment figure, you can work out how much rent you will need to receive each month.
Most lenders will require the monthly rental income to be between 120% to 130% of the monthly interest amount. This is built in to mitigate the risks of investors incurring other costs such as void periods and property maintenance.
Most lenders require a specific minimum rent to interest cover (known as RTI). The amount of RTI will be specified in each buy to let mortgage product.
Example:
If you borrow £120,000 at 4.99% over 25 years on an interest only basis, the monthly repayments will be £499 pcm.
If the required RTI cover is 125%, then the minimum rental income from the property must be at least £623.75 pcm. (125% x 499)
NB: If you were to borrow at the same rate on a repayment basis (i.e. capital and interest), the monthly mortgage repayments will be £700.81 pcm but the RTI calculation would be based on the interest only part, i.e. £623.75 pcm.
Also, the interest may be offset against tax. In this regard please seek professional advice from a qualified accountant.
For more information and advice on buy to let mortgages talk to one of our specialist consultants today on 0845 345 6788.
