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Rental cover calculator

What a buy to let lender will advance, which is decided by the rent and not by you

A buy to let loan is sized on the rent covering the stressed interest by a margin: 125 per cent for a company or a basic-rate taxpayer, 145 for a higher-rate one. The stress rate is the higher of a floor around 5.5 per cent and the pay rate plus two, except on a five year fix, where lenders may stress at the pay rate itself. That single exception is why a five year fix so often lends tens of thousands more.

For: Buy to let in a personal name or through a company

Tell us what you are looking forAll calculators
The property
£
The lender uses the lower of the price and the valuation, and a down valuation is the commonest reason a case falls over.
£
The valuer's rental figure, not the agent's optimism and not what the current tenant pays. The whole loan is sized on this one number, so it is worth a call to two letting agents before you rely on it.
£
Who is borrowing
How will it be held?
125% interest cover, and mortgage interest is fully deductible against corporation tax. This is now how most portfolios are held, and it is why.
Deal length
May be stressed at the pay rate itself. On the same rent this commonly lends tens of thousands more, which is the main reason five year fixes dominate buy to let.
%
The market average buy to let rate is about 5.5%. A product with a high arrangement fee usually carries a lower pay rate, which lends more on a five year fix: that trade is worth doing deliberately.
%
5.5% is the standard floor across the market. A few lenders use 5.0% or 5.25%, and finding one is worth more than shaving the rate.
%
Seventy five per cent is the standard buy to let ceiling. Eighty exists with specialists, at a price, and above that only on a handful of products.
Maximum loan on this rent£135,00075.0% of value, capped by the loan to value ceiling. The rent supports £192,000, comfortably more than the 75% ceiling of £135,000. This is a well-yielding property and the deposit is what limits you. That is £0 more than the £135,000 you wanted.
£45,000Deposit needed
£57,600Cash in, all in
5.25%Stress rate
7.0%Gross yield
The two caps
What the rent supports£192,000
£12,600 of annual rent ÷ (5.25% × 125%).
What the loan to value ceiling allows£135,000
75% of £180,000. This is the binding cap.
They lend the lower£135,000
The test itself
Stress rate5.25%
A five year fix may be stressed at the pay rate of 5.25% rather than at the floor. That single rule is why this lends more than a two year fix on identical figures.
Interest cover required125%
125%, the lower of the two thresholds.
Rent needed to reach the ceiling£738 a month
The rent already clears it, so the deposit is what limits this purchase rather than the property.
Gross yield needed4.9%
This property yields 7.0%. Anything below the required figure cannot reach the loan to value ceiling however good the property is, which is why high-value low-yield areas need much larger deposits.
What it takes to buy it
Deposit£45,000
Stamp duty£10,100
At additional property rates in England and Northern Ireland, including the five point surcharge on the whole price.
Cash in, all in£57,600
Deposit, stamp duty and about £2,500 of legal, survey and broker costs.
Monthly interest at the pay rate£591
Interest only on £135,000 at 5.25%. The rent covers it 1.78 times over at the pay rate, against the 1.25 times the lender requires at the stress rate.
What would change the answer
The same case on a two year fix£135,000
£0 less. The five year stress rule is worth more than the rate difference here.
Surplus rent above the test£312 a month
How much rent there is above what the stress test consumes at this loan. Headroom here is what lets you refinance again later without putting cash in.
Where these figures come from

Interest cover. The 2026 market standard is 125% for a limited company or a basic rate taxpayer and 145% for a higher rate taxpayer holding personally.

Stress rate. Typically the higher of a 5.5% floor and the pay rate plus two points. A five year fix may be stressed at the pay rate itself, which is why it so often lends more.

Rates and ceilings. The market average buy to let rate is about 5.5%. Seventy five per cent of value is the standard ceiling, with 80% available from specialists.

Stamp duty. England and Northern Ireland additional property rates, including the five point surcharge applied to the whole price from £40,000.

Every lender runs its own version of this test and the spread is wide: the floor, the margin over pay rate, the treatment of a product with a large arrangement fee, whether top-slicing from personal income is allowed, and the personal income minimum all vary. Portfolio landlords with four or more mortgaged properties face a further background portfolio test on the whole portfolio's cover, which this does not model and which catches people out. The rental figure that matters is the valuer's, not the agent's. An estimate, not advice, and not a decision in principle: the mortgage comes from a regulated broker or lender.

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