John Ellmore
Brean HorneUse our free buy-to-let mortgage calculator and find out how much you would need to borrow to buy an investment property. Simply enter the price of the property you want to purchase and the monthly rent you expect to charge and get your estimate.
Buy-to-let mortgage calculator
What is a buy-to-let mortgage calculator?
A buy-to-let calculator helps you estimate how much you could borrow to purchase or remortgage an investment property.
What information do I need to use a buy-to-let mortgage calculator?
You’ll need the following information to use our buy-to-let mortgage calculator:
- Property purchase price: How much money the property is worth.
- Monthly rent: How much is the monthly rental income.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a loan or any other debt secured on it.
How is the rental yield from a buy-to-let property calculated?
Rental yield is the income you earn or estimate you’ll earn from a buy-to-let property. You can calculate your rental yield in three simple steps:
- Calculate your annual rental income.
- Divide the rental income by the property value.
- Multiply the rental yield by 100.
For example, your monthly rental income for a property is £1,200 and the property purchase price is £200,000.
Your rental yield calculation would look like this:
- Annual rental income:£14,400 (£1,200 x 12)
- Income ÷ property value:0.072 (14,400 ÷ £200,000)
- Rental yield:7.2% (0.072 x 100)
Knowing the rental yield of a property can help you decide whether or not it’s a worthwhile investment.
How is the return on investment for a buy-to-let property calculated?
The return on investment (ROI) for a buy-to-let property allows you to calculate how profitable it could be.
You can calculate the return on investment for a buy-to-let property using this formula:
Profit from investment ÷ cost of the property x 100 = ROI
Profit is calculated by working out the annual rental income and subtracting the running costs for a buy-to-let property. Running costs include things such as mortgage payments, letting fees, building management fees, service charges, ground rent and maintenance costs.
The cost of the investment includes money that you’ve paid out of pocket towards the purchase of the buy-to-let property, including any tax paid.
What is a good return on a buy-to-let property?
Typically, a good buy-to-let property in the UK has a rental yield of between 6% and 8%. But it’s important to remember that returns will vary significantly depending on where the property is located. For instance, in London, property prices tend to be higher which will mean that rental yields will be lower.
Useful links
- Mortgage calculators
- Mortgage interest rate calculator
- How much can I borrow for a mortgage?
- Mortgage overpayment calculator
- Mortgage repayment calculator
- Stamp duty calculator
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