Buy-to-let · illustrative figures
Buy-to-let calculator
What you could borrow, the yield, and your own name or a limited company.
Enter a price and a rent; the figures update as you go. Illustrations, not advice.
A letting agent’s estimate, or the rent it achieves now.
Your income tax band decides the rent test many lenders use: 125% cover for a company or a basic-rate taxpayer, 145% for a higher- or additional-rate one.
You could borrow up to £240,000, limited by the deposit.
Loan you’d need
£225,000
Inside both limits
The lender’s line
£1,290/mo
Rent £1,450 is 141% cover
Close to the line. Lender criteria vary, so it’s worth a conversation.
Talk it through with NathanThe lender’s test
125% cover, tested at a notional 5.5%
Rent against the cover line
What you could borrow
Your property may be repossessed if you do not keep up repayments on your mortgage.
What this means for you
What this means for you
A lender testing at 125% cover and a notional 5.5% wants rent of about £1,290 a month on £225,000; £1,450 clears that by £160.
The deposit is the tighter limit: £240,000. At a 25% deposit the choice of lenders widens; that would be a loan of up to £225,000.
How we calculate this
How we calculate this
How is a buy-to-let worked out?
- The rent test
- Annual rent ÷ (loan × 5.5%) must reach the cover a lender asks for: about 125% or 145%. 5.5% is the lender’s test, not a rate you’d pay.
- Borrowing
- The lower of what the rent test allows and 80% of the price or value (a 20% deposit).
- Yield
- Gross: a year’s rent ÷ the price. Net: the rent you collect, less running costs, ÷ the price. The mortgage isn’t in either.
- Tax, in your name
- Rent less costs, taxed at your band; mortgage interest gives a credit of 20% of it (22% from 6 April 2027), not a deduction.
- Tax, in a company
- Corporation tax on profit after interest and company costs; dividend tax when it’s paid out, after a £500 allowance.
- Not included
- Stamp duty and buying costs, your personal allowance and other income, Scottish tax bands, capital gains and rate changes.
Illustrations, not an offer, a recommendation or tax advice. Tax rules from GOV.UK, checked October 2026. The sources are listed below.
I · Borrowing
How much can I borrow on a buy-to-let mortgage?
Usually the lower of two limits: what the rent supports on the lender’s test, and what your deposit allows. Here, up to £240,000, limited by the deposit.
Mostly on the rent, not your salary, though many lenders also set a minimum personal income.
How much you could borrow as the rent changes
The rent a lender’s test looks for, on a £225,000 loan
| Cover | A year | A month | Your rent |
|---|---|---|---|
| 125% (yours) | £15,470 | £1,290 | clears it |
| 145% | £17,940 | £1,495 | short by £45 |
The stress rate is a figure lenders use to test the rent, not a rate you would pay and not a rate we are quoting. Typical cover of 125%–145% at around 5.5%, checked September 2026 — not the terms of any one lender, and not a recommendation.
Deposit, first-time and portfolio landlords
Deposit
From 20%
Usually from 20%, and the range of options widens noticeably at 25%. A larger deposit also makes the rental cover test easier to pass.
Your first buy-to-let
Welcome
First-time landlords are catered for, though the choice of lender narrows. Some lenders require you to own your own home first, but not all do.
Four or more properties
Portfolio
Lenders assess the whole portfolio rather than just the new property. Portfolio landlords with four or more properties are handled.
General positions across the lenders we work with, checked September 2026. Not the terms of any one lender, and not a recommendation. Criteria change frequently. Loan-to-value figures here are indicative, and what applies to you depends on your circumstances.
II · Yield
How do you work out rental yield?
Divide a year’s rent by the price for the gross yield: here 5.8%. Take off running costs and empty months first for the net yield: 4.6%.
Rental yield is your annual rental income expressed as a percentage of the property value. Gross yield ignores costs, while net yield accounts for running costs and gives a more realistic picture.
The Ledger, line by line, for one year
The figures, line by line
| One year | £ |
|---|---|
| Rent, 12 months | £17,400 |
| Running costs | (£3,576) |
| Empty months | £725 |
| Letting agent | £1,668 |
| Maintenance | £834 |
| Insurance | £350 |
| After running costs (net yield 4.6%) | £13,824 |
| Mortgage, interest only | (£11,250) |
| Income tax | (£515) |
| What’s left | £2,059 |
III · Ltd or personal
Should I buy a buy-to-let in my own name or through a limited company?
It depends on your tax position, your plans and your costs, and it’s a question for an accountant. This shows how each is taxed at your figures. It isn’t tax advice.
This comparison describes how the two structures differ. It is not tax advice and it is not a recommendation. The right structure depends on your personal income, existing portfolio, acquisition plans and wider position — speak to an accountant before deciding, and we will make sure the mortgage strategy fits the answer.
Take-home in each year
The figures, year by year
| Tax year | Own name: tax | Own name: take-home | Company: corporation tax | Company: dividend tax | Company: take-home |
|---|---|---|---|---|---|
| 2026–27 | £515 | £2,059 | £204 | £40 | £830 |
| 2027–28 | £566 | £2,008 | £204 | £40 | £830 |
| 2028–29 | £566 | £2,008 | £204 | £40 | £830 |
| 2029–30 | £566 | £2,008 | £204 | £40 | £830 |
| 2030–31 | £566 | £2,008 | £204 | £40 | £830 |
| 2031–32 | £566 | £2,008 | £204 | £40 | £830 |
| 2032–33 | £566 | £2,008 | £204 | £40 | £830 |
| 2033–34 | £566 | £2,008 | £204 | £40 | £830 |
| 2034–35 | £566 | £2,008 | £204 | £40 | £830 |
| 2035–36 | £566 | £2,008 | £204 | £40 | £830 |
| 10 years | £20,127 | £8,300 |
How the two differ, point by point
Personal name
- Lower mortgage rates — personal buy-to-let lenders typically price more competitively than limited company lenders
- Simpler administration — no company accounts, no corporation tax returns, no director’s responsibilities
- Interest relief is restricted — mortgage interest relief is limited to the basic rate of tax for personal-name owners
- Income taxed immediately — rental profit is added to your personal income and taxed at your marginal rate
Limited company (SPV)
- Full mortgage interest deduction — interest is a business expense, deductible against rental income at company level
- Corporation tax on profit — charged at company rates rather than your personal marginal rate
- Profit can be retained — rental income can be reinvested into further purchases without an immediate personal tax charge
- Higher mortgage rates — limited company lenders price higher, though the gap has narrowed
The tax rules this uses, from GOV.UK
The tax rules this uses, from GOV.UK
- Income tax, 2026 to 2027
- Personal allowance £12,570; basic rate 20% to £50,270; higher rate 40% to £125,140; additional rate 45% above. Scotland has its own bands, which this doesn’t use.GOV.UK, Income Tax rates and Personal Allowances, checked October 2026.
- Mortgage interest, in your name
- Not deducted from the rent. A tax reduction of 20% of the lower of your finance costs, your property profits, or your income above the personal allowance; anything unused carries forward.GOV.UK, Changes to tax relief for residential landlords, checked October 2026.
- From 6 April 2027
- Property income is taxed at its own rates: 22%, 42% and 47%, in England, Wales and Northern Ireland, and the mortgage interest reduction is given at 22%.GOV.UK technical note, Finance Act 2026, section 7, checked October 2026.
- Corporation tax, from 1 April 2026
- 19% on profits up to £50,000, 25% above £250,000, and marginal relief between (fraction 3/200). The limits are shared between associated companies. A company that lets property to people it isn’t connected with isn’t a close investment-holding company, so these rates can apply; we assume one company and no associated companies.GOV.UK, Rates and allowances: Corporation Tax, Marginal Relief, CTA 2010 s18N, checked October 2026.
- Dividends, 2026 to 2027
- £500 dividend allowance, then 10.75% (basic), 35.75% (higher) or 39.35% (additional).GOV.UK, Tax on dividends, checked October 2026.
- Stamp duty
- In England and Northern Ireland, buying a buy-to-let as an additional property adds 5 percentage points to each band, for purchases on or after 31 October 2024. A company pays the higher rates on its first purchase too, and a flat 17% above £500,000 unless a relief applies, such as for a property rental business. Work out the stamp duty for a price →GOV.UK policy paper (Autumn Budget 2024), buying an additional residential property, corporate bodies, checked October 2026.
- Moving a property into a company
- Moving a property you already own into a company you control is a disposal for capital gains tax, valued at market value whether you sell it or give it, and the company pays stamp duty on at least the market value. Speak to an accountant before you do.HMRC CG14530, CG14620, Finance Act 2003, section 53, SDLTM30220, checked October 2026.
A Budget is due on 28 October 2026 and may change any of these. We’ll check them again after it.
IV · Where you are
First buy-to-let, a portfolio, or a remortgage?
Nathan arranges buy-to-let in personal names and through limited companies, for first-time and portfolio landlords. Your figures go with your booking.
Your first buy-to-let
Check the rent works before you offer
First-time landlords are catered for, though the choice of lender narrows. Some lenders require you to own your own home first, but not all do.
At these figures, the lender’s line£1,290 a month
Talk your first buy-to-let throughFour or more properties
Presented the way lenders assess a portfolio
Past four mortgaged properties, lenders look at the rental income, borrowing and void risk across all the properties you hold. Presenting it properly makes a material difference.
This property’s cover on the test141%
Talk your portfolio throughRemortgaging a buy-to-let
Release equity, if the rent covers the new loan
Refinancing to release equity is routine; the rent still has to cover the new loan on the lender’s test, so the rent usually sets the limit rather than the equity.
What the rent would support£253,000
Talk your remortgage throughV · Questions
Buy-to-let calculator questions
How much can I borrow on a buy-to-let mortgage?
Usually the lower of two limits: what the rent supports on the lender’s test, and what your deposit allows. Lenders typically want the annual rent to cover 125% to 145% of the interest at a notional stress rate of around 5.5%, a figure used only for the test, not a rate you would pay. As an illustration, rent of £1,450 a month supports a loan of up to about £253,000 at 125% cover, or £218,000 at 145%; with a 20% deposit on a £300,000 purchase the deposit limit is £240,000. General positions across the lenders we work with, checked September 2026, not the terms of any one lender.
How much rent do I need for a buy-to-let mortgage?
Enough to pass the lender’s rent test: annual rent divided by (loan × stress rate) must be at least the cover the lender requires. On a £225,000 loan, interest at 5.5% is £12,375 a year, so 125% cover means a lender is looking for rent of about £15,470 a year, roughly £1,290 a month; at 145% cover it is about £17,940 a year, roughly £1,495 a month.
How much deposit do I need for a buy-to-let?
Usually from 20%, and the range of options widens noticeably at 25%. A larger deposit lowers your loan-to-value, which generally opens up a wider range of products, and it also makes the rental cover test easier to pass — because a smaller loan means less interest for the rent to cover.
How much will a buy-to-let mortgage cost each month?
On an interest-only mortgage, the loan × your rate ÷ 12. As an illustration, a £225,000 loan at 5.00% is £938 a month; on a 25-year repayment mortgage it is £1,315. The rate you’re offered depends on your circumstances and the lender’s criteria.
Can I get a buy-to-let as a first-time landlord?
Yes — first-time landlords are catered for, though the choice of lender narrows. Some lenders require you to own your own home first, but not all do.
Can I remortgage a buy-to-let or release equity?
Yes, and both are routine — the rent still has to cover the new loan on the lender’s test. Because the cover test is applied to the new, larger loan, the amount you can release is usually limited by the rent rather than by the equity in the property.
What is rental yield?
Rental yield is your annual rental income expressed as a percentage of the property value. Gross yield ignores costs, while net yield accounts for running costs and gives a more realistic picture.
What counts as a good rental yield?
It varies by area and strategy. Investors generally look for a net yield that comfortably covers the mortgage and running costs with a margin, while also weighing potential capital growth.
What costs reduce net yield?
Mortgage interest, letting and management fees, insurance, maintenance, void periods, and tax all reduce net yield. The calculator lets you include these to see a realistic return.
What is cash-on-cash return?
Cash-on-cash return is the cash a property leaves you in a year, divided by the cash you put in. This calculator shows it after the mortgage and tax, on the deposit alone, as “Return on your deposit”; it leaves out buying costs such as stamp duty and fees.
Should I buy property personally or through a limited company?
It depends on your tax position, your plans and your costs. In your own name, rental profit is taxed at your income tax rate and mortgage interest gives a 20% tax credit rather than a deduction. In a company, interest is deducted before corporation tax, but a company has its own running costs, often pays a higher mortgage rate, and there is dividend tax when you take profit out. Speak to an accountant before deciding.
Can personal landlords deduct mortgage interest?
No. For personally held residential property, mortgage interest is not deducted from rental income; you get a tax reduction of 20% of it instead, limited by your property profits and income (GOV.UK, checked October 2026). From 6 April 2027 the reduction is given at 22%, when property income gets its own rates of 22%, 42% and 47% (Finance Act 2026).
What are the downsides of a limited company?
A company brings extra running costs such as accountancy and filings, can attract higher mortgage rates, and there may be further tax when you extract profit as dividends or salary.
Does this calculator give tax advice?
No. It’s an illustrative comparison to help you understand the trade-offs. Speak to a qualified tax adviser or accountant before deciding how to hold a property.
Are buy-to-let mortgages regulated?
Most buy-to-let mortgages are not regulated by the Financial Conduct Authority. Consumer buy-to-let — broadly, letting a property you did not buy as an investment, such as one you inherited or used to live in — is the exception and is regulated. If you’re unsure which applies to you, ask us.
Read and plan further
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Talk your figures through with Nathan
Nathan handles your case personally. Your figures go with your booking, so the call starts from your numbers: the property, the rent, how you’d own it and what the lender’s test says.
No credit check · no obligation
What Nathan will see with your booking
What Nathan will see with your booking
From the buy-to-let calculator Price £300,000 · rent £1,450 a month · deposit £75,000 (25%) Owned by you, basic rate Borrowing: up to £240,000, limited by the deposit (rent limit £253,000 at 125% cover, 5.5% test) Yield: gross 5.8%, net 4.6% · after mortgage (5.00%, interest only) and tax £172 a month Ltd or personal (basic rate, 10 years): own name £20,130 · company £8,300 paid out
You can edit or delete this on the booking page before you send it.
Our standard fee is £495, payable when your application is submitted. In some more complex cases, an additional broker fee of up to 1% of the loan may apply. The first conversation is always free, and we always confirm your total fee in writing before any work starts.
Your property may be repossessed if you do not keep up repayments on your mortgage.
Most buy-to-let mortgages are not regulated by the Financial Conduct Authority.