Buy-to-let mortgage calculator
There is no fixed government rate for buy-to-let borrowing; lenders size the loan from the rent using a cover ratio and a stress rate they set themselves. On £1,200 a month at a 145% cover ratio and a 5.5% stress rate, this works out to a maximum loan of about £180,564, with interest-only payments calculated at the pay rate entered.
How do lenders decide the maximum buy-to-let loan?
A buy-to-let mortgage is sized from the rent, not from salary. The lender runs an Interest Cover Ratio test: the annual rent has to cover a set multiple of the mortgage interest, and that interest is worked out at a stress rate set above the real pay rate. This is lender and industry practice rather than a fixed statutory rule, so ratios and stress rates vary between lenders. Rearranging the test gives the maximum loan directly, so a higher rent raises the cap while a higher cover ratio or stress rate lowers it.
The cover ratio depends on the borrower. A basic-rate taxpayer or a limited company is often tested around 125%, because more of the rent survives tax. A higher-rate individual landlord is usually tested around 145%, which shrinks the loan for the same rent. The stress rate does the same job from the other side, since it keeps the limit cautious in case rates climb.
What would this look like on my rent?
Take £1,200 a month, which is £14,400 a year. At a 145% cover ratio the rent is allowed to cover £9,931 of interest. At a 5.5% stress rate this supports an estimated loan of about £180,564. The estimated monthly cost is interest-only at the 5.00% pay rate, which comes to £752.35. This figure sits before letting costs, voids and tax on the rental profit.
Common questions
How do lenders decide the maximum buy-to-let loan?
Most use a rental cover test, also called the Interest Cover Ratio. The annual rent must cover a set multiple of the mortgage interest, worked out at a stress rate that is higher than the pay rate. On £1,200 a month at a 145% cover ratio and a 5.5% stress rate, the cap is about £180,564.
Why 125% for some borrowers and 145% for others?
The cover ratio reflects tax. Basic-rate taxpayers and many limited-company borrowers are often tested at 125%, while higher-rate individual landlords are usually tested at 145% because they keep less of the rent after tax. A higher ratio means a smaller loan for the same rent.
What is the stress rate?
It is a notional interest rate, usually around 5.5% or the pay rate plus a margin, that the lender uses only to size the loan. It is not what you pay. It protects the lender if rates rise, so the borrowing limit stays cautious even when deals look cheap.
Why is the monthly payment interest-only?
Most buy-to-let mortgages are interest-only, so the monthly cost is only interest on the balance and the full loan is still owed at the end. That keeps the payment low against the rent. The calculator shows the interest-only cost at the actual pay rate, not the stress rate.
Does passing the cover test mean the property makes money?
No. The test only checks the rent against the interest. Running costs, letting fees, voids, maintenance and tax on the rental profit all come out on top. A property can pass the lender test and still leave little in hand once those are paid.
What would this look like on my rent?
Take £1,200 a month, which is £14,400 a year. At a 145% cover ratio the rent is allowed to cover £9,931 of interest, and at a 5.5% stress rate this works out to an estimated maximum loan of about £180,564. The estimated monthly cost, interest-only at the 5.00% pay rate, is £752.35, before letting costs, voids and tax on the rental profit.
Sources & Rate Verification
Rates verified against official statutory guidance on 6 September 2026.