Buy to Let Mortgage Calculator

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ABC FinanceBuy To Let Mortgage Calculator

Author: Lee Hemming CeMAP

20+ years experience in buy to let mortgages

If you have the financial capacity to investigate buy-to-let mortgages, property can be a powerful investment tool. Housing will always be in high demand, and rental yield can be a great way to supplement – or replace – your monthly income.

By taking advantage of our online buy to let calculator, you’ll learn much you can potentially borrow against such an agreement and bolster your portfolio..

Find out how much you can afford to pay with our BTL mortgage calculators

The purpose of ABC Finance’s buy-to-let mortgage calculator is pretty simple. This tool is the first step toward learning if you will be eligible for such a loan, and will provide you with some idea of how much you will able to borrow on such a loan.

More than any other mortgage, these mortgage loans are based on affordability. While a lender may show a little more forgiveness and flexibility toward outstanding debts such as car payments and credit cards when looking for a loan for a residential home, a buy-to-let mortgage will be treated as a business transaction. 

With this type of investment mortgage, you will only be permitted to borrow a sum that a lender is confident you can afford without support from external sources, including a monthly salary. You can use our online calculator to review how much you can afford to repay on a mortgage, which by extension will bolster your chances of a successful mortgage application.  

Input your BTL mortgage rates to calculate your costs

The purpose of our online calculator is to compare how much you can afford to borrow on a mortgage, particularly one taken out on a buy-to-let basis. 

Like all our guides, the information provided is not a guarantee of a line of credit - it is designed for information purposes only.  However, this will give some insight into the mortgage rates out there right now. This may help you obtain a prime rate.

Now that you have input your data, you will have an idea of what you can afford to spend on a mortgage - whether that is as a limited company or a private individual. Use this tool to crunch your numbers before you compare what offers different mortgage lenders may let you investigate.

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Taking out a BTL mortgage is rarely as straightforward as simply purchasing a residential home that you plan to live in. Buying a home that you plan to rent out to tenants will be considered a higher risk by mortgage lenders, and will invariably lead to higher fees attached to the mortgage on the home.  

While the process of applying for this kind of mortgage will not exclusively take place online, you can get an idea of the best mortgage deals open to you through ABC Finance’s buy to let mortgage comparison page. Let us direct you to the best possible deal for your circumstances.

As with all mortgage calculators and loan summaries, the numbers you’ll find here are not precise promises of the buy to let mortgage interest rates you’ll be offered. A lot still depends on your unique personal and financial circumstances, including the credit score attached to your personal and professional accounts, as well as the rental income you will theoretically generate. 

This page is a great first step to gain an understanding of what interest rate you looking at paying though, and it’s certainly more effective than contacting each bank in turn and making direct enquiries.  

Does my rental income affect how much money I can borrow?

Rental income will directly influence how much you can borrow on a buy-to-let mortgage. If you’re interested in property investments of this type, lenders will be keen to see proof that you’ll be able to keep up with your repayments.

Let's imagine that you are taking out a mortgage with monthly repayments of £500 per month. If your rental yield from the property in question comes to £750 per month, you are considerably likelier to be approved than if you can only charge £520. Lenders will be keen to see some degree of safety net regarding income vs. expenditure.

Rental yield does not need to be the end-all, be-all of how much you will be entitled to borrow. If you can also point to significant sums in a savings account or one or more ISAs, for example, you may be able to assure your mortgage provider that you will not struggle to pay back what you owe. 

As a rule, though, the rental income generated by the property itself should be at the heart of your financial agreement. Jobs and personal circumstances can and do change, so lenders will not feel entirely comfortable with a mortgage agreement that is at the mercy of multiple different revenue streams. 

Can I check interest-only BTL mortgages using your calculator?

You will be permitted to investigate interest-only mortgage products using our online calculator, but think carefully before committing to such a deal. While there are undoubtedly some advantages to using this approach to buy a home you plan to let out to tenants, there are also some substantial notes of caution.

The biggest advantage of these loans is a lower monthly repayment. Buying a property on an interest-only basis means that you will not need to pay down the balance of the mortgage on a monthly basis. In the short term, your only concern will be to meet the interest fees agreed upon with the lender.

Of course, all good things must come to an end, and once an initial term draws to an end, you will be on the hook for the full balance of the home. If you cannot make this full payment and close the account down, you will lose ownership of the asset.

To this end, interest-only mortgages should only really be considered if you are confident you will be able to save enough money to cover this balance during this repayment term, or you are planning to sell the home for a profit and cover the cost this way - and that you will not have any trouble with your tenants refusing to move out of the home in a timely manner. 

The terms of these loans will not suit everybody, so discuss your plans with the friendly and experienced team at ABC Finance to ensure you are making the best possible decision.

Can you offer a BTL mortgage to first-time buyer?

Most lenders have strict criteria when it comes to a buy to let mortgage, and one of these may be previous experience in acting as a landlord.

While there is nothing to say that you will definitely not be approved to buy a home on this basis as a first-time buyer, but consider this caveat while using the calculator.

If you are a first-time buyer that is seeking a BTL mortgage, perhaps because you are seeking a passive income stream while you travel or while you focus on setting up a new business venture, prepare yourself for higher interest rates and a deep dive into your finances. 

Any lender will consider a first-time landlord to be a significantly higher risk than somebody with extensive experience in managing property, and with a track record of buying and selling property designed for this purpose.

Buy to let is considered a specialist business model, so lenders are a little more cautious about who they let make such a purchase. 

Thankfully, it’s not all bad news - there are ways that you can settle some of these nerves. Before applying for this mortgage, take out an extensive health and life insurance policy.

Seek out a reputable provider that has won awards for their service level if possible. Naturally, you’ll also need a very thorough home insurance policy.

Above all, wait until you have a substantial deposit to lay down on the property - ideally at least 25%, preferably more. This will make it likelier that you will be approved for a mortgage, as the monthly payments due will be a little lower.

As always, use our mortgage calculator to gain greater insights into how much you can afford to borrow after this upfront payment.

Do you have any other BTL mortgage guides?

Our calculator is not the only guide to mortgages provided by ABC Finance, whether buy-to-let or otherwise. For additional mortgage guides related to the world of buy-to-let home ownership, be sure to look at the rest of our BTL hub. 

Of course, you are also welcome to contact ABC Finance online or over the phone at any time to discover more about how we can help you meet your financial ambitions.

Whatever mortgage you are looking for, our friendly and experienced team will be happy to lend our advice and expertise.

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