Buy-to-Let Mortgage & Yield Calculator (UK)
Calculate buy-to-let mortgage repayments, gross and net rental yield, Interest Coverage Ratio (ICR), and monthly cashflow for UK property investment.
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Buy-to-Let Investment Guide
What's the key thing to understand about Yields and ICR Explained?
Gross rental yield = (annual rent / property price) × 100. Quick benchmark only. UK averages: 4-6% gross yield. Higher (7%+) typical in low-price northern England areas. Lower (3-5%) in London and South-East. Net yield = (annual rent − all costs) / property price × 100. More accurate. Subtracts: mortgage interest, agent fees, insurance, maintenance, vacancy losses. ICR (Interest Coverage Ratio): lender stress test. Rent ÷ mortgage interest at stressed rate. Buy-to-let mortgages typically require rental income to cover 125-145% of the mortgage interest at a stressed rate (often 5.5-7%), not the actual pay rate, which limits how much can be borrowed relative to the achievable rent.
What's the key thing to understand about True Costs of Letting?
Often overlooked costs: void periods. Even with full-time letting, expect 3-8 weeks unoccupied per year between tenants. Maintenance reserves: 1% of property value per year minimum (£250k house = £2,500/year). Big-ticket items (new boiler £2,500, new bathroom £5,000, roof repairs £3,000) come along every few years. Letting agent: full management 8-12% of rent. Plus tenant find fee (often 1 month's rent additional). Online-only agents: cheaper (£100-200 flat fees) but less hands-on. Landlord insurance (different from standard home insurance, and compulsory for most BTL mortgages): typically £150-300/year.
What's the key thing to understand about Tax Treatment (Major Changes Since 2017)?
Section 24 (since 2017): mortgage interest is NO LONGER deductible from rental income. Instead, a 20% tax credit is given. Massive impact on higher-rate taxpayer landlords — their effective tax rate on a leveraged property can exceed 100% of profit. For higher-rate taxpayers (£50,270+): only basic-rate relief on mortgage interest = 20%. Income tax then due at 40% on rental income BEFORE deducting interest. Net result: higher-rate landlord with £15k rent and £10k interest pays tax of £4k vs £2k previously under the old rules — a significant increase in effective tax rate purely from the change in how interest is treated.
Is BTL Still Worth It in 2026?
Honest assessment in current market: cash-flow positive BTL increasingly difficult with mortgage rates 5%+ and Section 24. Many leveraged BTL properties now break-even or negative cashflow. Better suited to: cash-rich investors (no mortgage). Limited company structures (especially for higher-rate taxpayers). Long-term capital growth bet rather than income play. Areas where rental yields exceed mortgage rates by clear margin. Worse for: highly-leveraged investors (75%+ LTV). Higher-rate individual landlords in high-mortgage, low-yield areas are the group most squeezed by current tax rules — running the numbers through a limited company structure is worth exploring if this describes your position.