How much could I Borrow?

£
per month

Borrow up to:

£288,000

or £248,276 for House in Multiple Occupation (HMO)

or £248,276 for Higher Rate Taxpayers (HRT)

or £288,000 for Limited Companies (SPV)

How much could will it cost?

£
£
%

Interest Only Mortgage Payments:

£417/month

Loan to Value (LTV): 67%

Rental Yield: 6%

Buy-to-Let Mortgage Calculators use lots of common assumptions. The calculator can be used for estimates, check with your mortgage adviser for accurate calculations. Each Buy-to-Let mortgage lender has differing criteria.

How to calculate buy-to-let mortgage affordability?

Buy-to-Let mortgage affordability is calculated based on the rent a property achieves. The greater the rent, the higher the loan amount you can borrow.

A rental stress test formula determines the maximum mortgage.

Except, there is also maximum loan-to-value—typically 85% of the value of the property.

What is the rental stress test formula?

Mortgage Lenders have different criteria, but we can work estimate from the averages.

On standard buy-to-let, your rent must is 125% higher than your mortgage payments at a payment rate of 5.5%.

Given £500 rent the formula would be:

£500 (times) 12 (divide) 125% (divide) 5.5%

On a calculator:

£500*12/1.25/0.05 = £96,000

Higher Rate Taxpayers use an increased rental formula of 145% up from the standard 125%. The use of a Limited Company (SPV) can lower it back down to the standard.

Houses in Multiple Occupation (HMO) also use an increased rental formula of 145% up from the standard 125%.

Remortgaging is exempt from the regulation, but lenders implement the stress test as standard good practice.

Note: These stress tests were introduced in January 2017 by the Prudential Regulation Authority (PRA)

I'm just below affordability, what can I do?

Talk to our mortgage advisers about a rental stress test top-up. Some mortgage lenders will take your income into account as well as the rental income.

How is buy-to-let mortgage cost calculated?

The mortgage calculator only calculates the interest-only payment. If you want a repayment mortgage, the monthly cost will be higher.

Given £50,000 mortgage and interest at 2.5% the formula would be:

£50,000 (times) 2.5% (divide) 12

On a calculator:

50000 * 0.025 / 12 = £104

You can lower the mortgage costs by obtaining a mortgage with a lower interest rate. Otherwise, put a higher deposit into the property lowering the loan required.

What is Rental Yield Calculation?

Landlords use rental yield as a metric to calculate the value of the property investment. It allows the natural side by side comparison of properties.

How is the rental yield calculated?

On this mortgage calculator, we use Gross Rental Yield using only property value and rent. Net Rental Yield also includes costs and maintenance.

Given £100,000 property and rent of £500 the formula would be:

£500 (multiply) 12 (divide) £100,000 * 100

On a calculator:

500 * 12 / 5000 * 100 = 6%

There is no set rule for minimum rental yield, but our professional landlords tell us they aim for 7% or higher.

What is the Loan to Value (LTV) Calculation?

Loan to Value (LTV) is used to express how much of the property value will be mortgaged.

A 70% LTV Mortgage on the house valued at £100,000 will have a £70,000 mortgage and £30,000 deposit.

The formula for Loan to Value (LTV) is:

£70,000 (divide) £100,000 (times) 100

On a calculator:

70000 / 100000 * 100 = 70%

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Think carefully before securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage.

Cyborg Finance Limited is registered in England and Wales (No. 09623432) at 151 Cutler Heights Lane, Bradford, BD4 9JB
We are also authorised and regulated by the Financial Conduct Authority 919921). The FCA does not regulate most Buy to Let mortgages.
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