Buy to let mortgage calculator

The amount you need to put down on a buy to let mortgage typically depends on the lender and their specific requirements. In general, most lenders will require a larger deposit for a buy-to-let mortgage than they would for a standard residential mortgage.

The minimum deposit for a buy to let mortgage is currently 15% of the property value, though the options are narrow. At 75% loan to value you will have far more lenders available to you.

It's worth noting that the size of your deposit can also affect the interest rate you're offered on your mortgage. Generally, the larger your deposit, the lower your interest rate is likely to be.

If you're considering taking out a buy to let mortgage, it's a good idea to speak to a mortgage advisor who can help you understand your options and find a lender that's right for you.

The interest rate for a buy to let mortgage is typically higher than that of a residential mortgage, as there is typically a higher risk associated with lending money for investment purposes.

The exact difference in interest rates can vary depending on several factors, including the lender, the borrower's creditworthiness, and the loan-to-value ratio.

It's important to note that there may be other costs associated with a buy to let mortgage as well, such as higher arrangement fees or larger deposits required. The job of a broker is to compare different lenders and products to find the best deal for your specific circumstances.

Calculating buy to let costs involves considering both one-time expenses and ongoing costs associated with owning and renting out a property. Here are some of the main costs to consider:

1. Purchase costs: This includes the cost of buying the property, such as the deposit, legal fees, stamp duty, and mortgage arrangement fees.
2. Renovation costs: If the property requires renovation or refurbishment before you can rent it out, you'll need to factor in the costs of materials, labour, and any necessary permissions.
3. Mortgage payments: This is the amount you'll need to pay each month to your lender for your mortgage. A buy to let mortgage broker can help you with this by finding you an appropriate mortgage deal.
4. Insurance: You'll need to purchase landlord insurance to protect your property and cover potential liability issues.
5. Maintenance and repairs: You'll need to budget for regular maintenance and repairs to keep the property in good condition.
6. Letting agent fees: If you use a letting agent, you'll need to factor in their fees.
7. Taxes: You'll need to pay income tax on your rental income, and you may also need to pay council tax if your property is a house of multiple occupation (HMO), when you buy a property you will pay Stamp Duty Land Tax (including the 3% surcharge), or the equivalent depending on the .
8. Void periods: There may be times when your property is vacant, and you're not receiving rental income. You'll need to factor in these void periods when calculating your costs.

To calculate the total costs of owning and renting out a property, you should add up all of these expenses and subtract them from the rental income you expect to receive. This will give you a net income figure that you can use to determine whether the investment is financially viable.

The length of an average buy to let mortgage varies depending on the borrower's requirements.

Buy to let mortgages are designed to be a long-term investment, so a term running over one or two decades would not be uncommon.

The length of the mortgage term can depend on the borrower's age, although some lenders set no upper age limit for applicants whether at application or at the end of the term, so whilst you might think – if you are older than say 60 years, you may struggle to get a buy to let mortgage, this is not necessarily the case.

The minimum amount of time you can take out a mortgage, without paying Early Repayment Charges (ERCs) will be reflected in any initial rate period your mortgage product has. So, if you took out a five year fixed rate mortgage, you could repay before five years have passed, but you are likely to pay ERCs. After the five years, you can sell your property without penalty, or switch to another product.

Some products have no initial rate period and no ERCs, meaning you can repay the mortgage at any time without being charged ERCs.

As mentioned above, investing in buy to let is not ideally suited to short term investment period, as upfront costs could mean that you make a loss if you were to sell the property soon after having mortgaged it.

With a capital repayment mortgage, you will pay back an amount of the loan (the capital) and the interest each month. With an interest-only mortgage you only pay the interest on the mortgage each month.

With a capital repayment mortgage, the amount you owe will reduce every month, as long as you keep up with the repayments. At the end of the mortgage term you will own the property outright. As you are paying back both, the costs of a repayment mortgage are higher than a like for like interest only mortgage.

With an interest-only mortgage, at the end of the term, you will need to repay the capital that you have borrowed.

This means your monthly mortgage payments would be smaller than a like-for-like capital repayment mortgage. Some landlords use the rental income to cover the monthly mortgage payment, and plan to sell the property at the end of the mortgage term, using the income from the sale to cover the capital owed.