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Buy to let maximum mortgage calculator

Use the buy to let mortgage calculator to see how much you can borrow based on a given rental amount.

The calculator isn't exact as there are many different calculations used by the different lenders.

The calculator mimics the most common way of assessing rental cover and gives results to illustrate the differences between the most competitive lenders and those with more flexible terms

It's typical to find the more competitive lenders using a higher "rental coverage" which limits the amount of lending based on the rental from the property.

So in general, borrowing more means conceding to less competitive mortgage deals

Buy to let maximum loan calculator

Understanding this calculator:

The most competitive lenders currently use a rental coverage of 1.25x the mortgage on an interest rate of 5.99%. The rental needs to cover this amount, and hence determines the maximum loan.

For lenders who are typically less competitive, this eases with the calculations being based on 1.25x the actual interest rate of the product, so if this is lower they can lend more.

Buy to let rental coverage calculator

Use the buy to let rental cover calculator to see exactly how much can be borrowed if you know the lenders specific formula

This calculator is exact but you need to know exactly the coverage requirement for the lender

For example some lenders now specify that the property needs to have 140% cover based on an interest rate of 5.50%.

If you enter 5.50 in the interest rate section, and 140 in the rental cover section this will give you the true maximum loan based on that coverage calculation

It's therefore a quick and easy way of determining maximum lending for certain lenders if you are familiar with their coverage requirements, but not so great with the actual maths.

Buy to let rental coverage calculator

Understanding this calculator:

This calculator is really useful for those landlords who know their lenders rental assessments well enough already and just want a quick way to calculate lending limits on a remortgage for example. If you want to understand it better call us.

Buy to let rental yield calculator

Use the buy to let rental yield calculator below to compare the the rental yield, or income gain from the property against other investment returns.

This illustrates the properties profitability versus the expected return of something like a savings account or investment bond.

It should be remembered though that the property may also increase in value and the calculator cannot factor this in. You might compare this to owning shares where the value could increase in which case you might compare this to the expected dividend returns.

Buy to let rental yield calculator

Understanding this calculator:

This is the net annual profit from the properties rental expressed as a percentage return based on the amount of deposit invested in the property.

This compares the profitability of the amount invested in the deposit against other investments.

Understanding the Buy to Let calculators

Buy to Let Mortgages are usually assessed based around rental coverage.

This is usually defined as the percentage of the mortgage payment which is covered by the monthly unfurnished rental rate for the property.

If the maximum rental was equal to the interest only mortgage payment for the property the rental coverage would be 100%.

Most buy to let lenders require rental coverage to be over 125% to 140% and based on "notional" interest rate of between 3-6% or higher in some cases.

Based on the same mortgage interest rate this would therefore change the maximum loan available from one lender to another, and the calculator works out the maximum loan size on each level of rental coverage based on then maximum rent and mortgage interest rate.

As buy to lets are an investment, rental yield gives you a measure of the profitability of the property in cash terms as a comparison against a similar investment vehicle such as an ISA or Unit Trust.

It's important to remember though the property itself increases in value too, so the rental yield would be similar to the dividend income received from an investment in shares, whereas the capital growth in property value would need to be compared against the capital growth of a share portfolio to assess both aspects of the properties return.

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