Ideal for first-time as well as existing landlords our buy-to-let calculator will give you all the information you need for products across the marketplace. It’s easy to use and allows you to experiment with the parameters to see which Buy to let option would suit you best.

Rental Yield Calculator

£
£
Your Result
Note

This calculator is intended to give an indication only.

How are buy-to-let mortgages calculated?

Buy-to-let mortgage rates are calculated on your loan-to-value (LTV) and the duration of the mortgage deal. Usually, the cheapest buy-to-let mortgages are those with the lowest LTV of 60% and shorter deal terms (avoiding the lender’s standard variable rate).

Lenders treat mortgages for a rental property as a higher risk than a residential mortgage. This means buy-to-let mortgages generally have a higher minimum deposit of 20% and come with higher interest rates and fees compared to residential mortgages.

How much can I borrow on a buy-to-let mortgage?

Mortgage lenders usually require your rental income to be at least 125% of your monthly mortgage payments or mortgage interest. Some lenders may require a higher minimum rental income sometimes over 145%. As part of this calculation, lenders will use a managed rate and not your actual mortgage product rate to calculate your monthly buy-to-let mortgage payment – in a lot of cases, this is 5.5%. You will also need to meet the lender’s minimum salary requirements.

How much would a £100,000 buy-to-let mortgage cost?

A £100,000 buy-to-let mortgage at a rate of 1.39% fixed for two years (60% LTV) with a fee of £1,499 would cost you £10,973.93 over the two-year term. This would be a repayment mortgage over a 25-year term.

What is a good return on a buy-to-let mortgage?

You can use three different calculations to find out if your property investment is paying a satisfactory return. These are rental yield, return on investment and cash on cash.

How is rental yield calculated?

To work out rental yield, you take the annual rent divided by the value of the investment property multiplied by 100.

Rental yield = (Annual rent / property value) x 100

For example, a £250,000 property earning £860 per month in rent would achieve a 4.16% yield.

How is return on investment calculated?

Your return on investment is calculated by calculating your earnings less your cost of investment, divided by the cost of investment. Then multiplied by 100 to get a percentage.

Return on investment = (Total of earnings – cost of investment) / cost of investment x 100

This calculation is very simplified and is not specific to buy-to-let investments

How to calculate cash on cash returns for your buy-to-let property

This calculation allows you to see the return on your initial cash investment less your monthly mortgage payments.

Cash on cash return = (Net annual cash flow/total cash invested) x 100

Cash invested includes any deposit you needed for the mortgage, any additional fees connected to your investment and as any costs for work or refurbishments made to the property.

Net annual cash flow is your annual rental income less your annual mortgage payments.

For example, you invest in £50,000 as a deposit for your buy-to-let mortgage and spend £10,000 in renovations. Your total cash invested in £60,000. You pay £350 per month for your buy-to-let mortgage and receive £860 in rental income. Your net annual cash flow is £6120. Your cash on cash return would be 11.4%.

Why is it important to calculate your investment return as a buy-to-let landlord?

Rental yield is a measure of your annual return on your buy-to-let investment. You can use it to compare it to the rates of return on other investments such as savings accounts and to check your investment is outperforming inflation.

What is a good return on a buy-to-let property?

A good rental yield varies depending on the location of the property due to property costs and the health of the rental market. The top 25 locations for rental yield in the UK currently achieve between 6.9% and 11.99%.*

*Source – Totally Money Buy to Let Yield Map 2018/19.

What is the best buy-to-let mortgage for you?

Finding the right buy-to-let mortgage depends on the circumstances of your property and yourself. You may find that to be eligible for some buy-to-let mortgages that you need to be an experienced landlord rather than a first-time landlord. Some lenders will not accept properties of unusual construction type, including flat and thatched roofs while others may have rules about local authority properties or flats above commercial premises. Some lenders also restrict multiple properties or houses of multiple occupation. 

You can find the right buy-to-let mortgage either by researching the market directly using our comparison table or by speaking to our preferred mortgage broker.

Still not sure?

Read All Our Mortgage Guides
guide icon
Buy-to-let mortgages

Read our guide about the ins and outs of buy-to-let mortgages.

Read More
guide icon
Buy-to-let rule changes - what do they mean?

A guide to the changes in rules for buy to let portfolios.

Read More
guide icon
Five steps to becoming a buy-to-let landlord

Our guide to help with those first steps to becoming a buy-to-let landlord.

Read More

Ask us anything

Ask us anything

Get our weekly newsletter

Weekend Moneyfacts is available free by email to all Moneyfacts.co.uk users.

Please send me Weekend Moneyfacts, Savers Friend and selected third-party offers.

How Moneyfacts works

  • blue money scales

    BALANCED. Moneyfacts.co.uk is entirely independent and authorised by the Financial Conduct Authority for mortgage, credit and insurance products.

  • free label

    FREE. There is no cost to you. Our service is entirely free and you don't need to share any personal data to access our comparison tables.

  • drawing of pound sign and arrow

    TRANSPARENT. We only receive payment from product providers and intermediaries for quick/direct links and adverts through to their websites.

  • blue binoculars

    COMPREHENSIVE. We research the whole market and scour the small print so you can find the best products for your needs.

Cookies

Moneyfacts.co.uk will, like most other websites, place cookies onto your device. This includes tracking cookies.

I accept. Read our Cookie Policy