Buy to let mortgage borrowing calculator
The above calculator should be used as a guide only. It may be possible for you to borrow more. Our expert mortgage consultants can often arrange higher borrowing, subject to the usual credit checks and affordability criteria. Call us today on 0345 345 6788 or request a call back.
How Much Can I Borrow?
Before you begin your property investment journey, use our calculator to find out how much you can borrow to see what kind of buy to let mortgage will be available to you. Please keep in mind that this calculator is a guide only and that every lender has their own requirements and specifications, so you may be able to borrow more money or have different terms from lender to lender.
How much could I borrow based on my rental income?
Our mortgage calculator bases how much you can borrow on the average results gathered from the market and current lender behaviour. The primary factor in how much you can borrow is how much rental income you will earn from the property, so it is essential to have a clear and objective view of these earnings. Generally, a lender will want to see that the rental income is 125% - 145% higher than the monthly mortgage repayments.
For example, based on a rental income of £1,000 per month, you could qualify to borrow up to £225,000.
What factors could affect how much I can borrow?
Other factors that may affect how much you can borrow include:
- LTV – Every lender has their own loan to value (LTV) formula to assess lending risk. The higher your LTV, the lower your risk, and the more you will be able to borrow.
- Your deposit – The amount of capital you will be able to put down on the property contributes to the security of the lender, increasing your LTV. Typically, lenders will expect to see a deposit that is at least 20% of the property’s value, with many lenders requiring a much higher deposit for a BTL mortgage than a standard residential mortgage.
- Age – Some lenders have age restrictions in their lending criteria based on how old you will be (and therefore less likely to be working) during the term of your loan. This ceiling will depend on how old you or the youngest mortgage applicant will be when the term ends and varies from lender to lender.
- Employment – The more secure your employment, the easier it is to borrow more money. Lenders will look at whether you earn a salary and bonuses, whether you are self-employed or freelance, or whether you earn a basic salary and commission. Being self-employed does not exclude you from a BTL mortgage, but may impact how much money you can borrow and you may need access to lenders with less restrictive criteria.
- Applicants – A joint application is often viewed as more secure than a single applicant, especially if the additional applicant has good financial security and good credit. If you are self-employed or considered to be a higher risk due to your employment structure, you may still be able to apply for a loan or borrow more money if the other applicant is in a secure position.
What if I need to borrow more?
Our BTL mortgage borrowing calculator should be used as a guide only. It delivers an average of what you may be able to borrow based on rental income, and this means that you can borrow more than the amount it shows.
For the most accurate results, it’s best to talk to an experienced mortgage consultant. We have access to a strong network of lenders as well as mortgages that are not always available on the open market, so we can often arrange higher borrowing within the required credit checks and affordability criteria.
Please also be aware that you may have to pay an early repayment charge to your existing lender if you are changing lenders, that you may have to pay a small fee for mortgage consultation, and that your home can be repossessed if you don’t keep up with mortgage repayments. At Mortgages for Business, we act ethically and honestly with all our clients, being upfront about costs and risks. We aim to find the best mortgage for you – not our bottom line.
BTL mortgage vs. capital repayment – Advantages and disadvantages
When you borrow for a mortgage on investment property, you will have two main options on how you want to structure the loan – a BTL mortgage or a capital repayment mortgage.
Capital repayment mortgage
This works like a typical residential mortgage, where you pay the interest and a portion of the capital each month to fully pay off the property throughout the period. This means you don’t have to be concerned about paying a large lump sum at the end of the mortgage term, and you have the advantage of knowing you will own the property outright at this point providing you have made all the required payments. The disadvantage is that it means paying a much higher amount each month.
Interest-only BTL mortgage
Also called an interest-only mortgage, these require you only to pay off the interest on the loan each month, not the capital. The capital payment will be due at the end of the loan’s period. The advantages are that you have much lower monthly mortgage payments, can free up money for other investments or property improvements, can create a financial safety net, and may be able to sell your property at a profit at the end of the term when the lump sum is due. The downside is that you will have to prepare for the lump sum payment at the end of the term or you may be faced with having to sell the property.
Interest-only BTL mortgages are the most popular form of financing an investment property in the UK. Our mortgage brokers can walk you through each option to help you find the one that works best for you.
How our mortgage brokers can help
If you want to get a clear and accurate idea of how much you can borrow to invest in a rental property in the UK, our mortgage brokers are ready to help. With over 20 years of experience, a strong network of lenders, and being fully independent, we can provide objective, practical insight into BTL mortgages.
Not only will we help you find out how much you can borrow, but we can also help you find the best possible lender and mortgage deal for your requirements – many of which are simply not available without the assistance of a broker. Ethical, straightforward and transparent, our team will work with you to find the best type of loan, right loan structure, and best terms for your investment, making your BTL property experience as rewarding as possible!