Using a Buy to Let Mortgage Calculator

A lot of first time property investors make the fundamental mistake of researching the property market, finding the perfect rental property and then seeing if they can get approval for a buy to let mortgage big enough to cover the purchase price minus deposit. What they should do is use a buy to let mortgage calculator to get a rough estimate of how much they can borrow before looking around for properties.

What is a buy to let mortgage calculator?

A buy to let mortgage calculator is an online tool, found on most mortgage provider websites, which is designed to tell you how much you may be approved to borrow in the form of a buy to let mortgage. There are two main ways in which a buy to let mortgage calculator works:

1. You can find out how much you can borrow based on the estimated rental income of the type of property you are looking at buying. So in most cases you will be asked to enter the monthly rent you will be asking and the value of the property if known. For example, let’s say you want to purchase a £160,000 buy to let property and you will be asking £600 per month rent. The buy to let calculator will work out a) if £600 is a feasible rent and b) the maximum you could borrow based on the rent amount inputted. If £600 is feasible the calculator will return an amount of £120,000, which is the maximum amount any mortgage provider will lend in this situation i.e. 75% of the purchase price.

2. You can input your household’s annual income into a buy to let mortgage calculator and again, you will be given a maximum amount available to borrow in the form of a buy to let mortgage. So for example, let’s say you earn £19,000 per year and your partner earns £11,000. A total of £30,000 will be used by the calculator to work out how much you can comfortably borrow, in this case around £150,000. Of course you could only borrow this amount if the property you want to buy is at least £200,000 because as mentioned above you can only borrow a maximum of 75% of the property value.

Where to find a decent buy to let mortgage calculator?

The vast majority of buy to let mortgage providers will have a calculator tool somewhere on their website. It is important not to use a regular mortgage calculator though as different principles apply to buy to let mortgages and the maximum amount you can borrow is calculated using different figures.

Alternatively you can use the buy to let mortgage calculator supplied on this site to find out if your dream of being a property investor is closer than you think.