Maximum Loan Amount
£180,564
Annual rent: £14,400
At Your Actual Pay Rate
Illustrative only. Real lending decisions also factor in personal income, credit history, portfolio size, and property type, and exact stress rates/ICR requirements vary by lender and product. Not financial advice — confirm affordability with a mortgage broker before offering on a property.
What This Calculator Does
Most buy-to-let calculators start from a property price and tell you the yield. This one runs the calculation lenders actually use in reverse — starting from the rent a property can achieve, it finds the maximum mortgage a lender's stress test will allow.
Enter the rent, the lender's stress test rate (a notional rate higher than what you'll actually pay, used to check the loan survives rate rises), and their required interest coverage ratio (ICR) — the calculator gives you the maximum loan, the maximum property value at your target LTV, and the deposit you'd need to find.
How the Calculation Works
Lenders require rental income to cover mortgage interest by a margin — the interest coverage ratio (ICR). Maximum allowable annual mortgage cost = annual rent ÷ (ICR ÷ 100). At 145% ICR and £14,400 annual rent, the mortgage cost can be at most £9,931 a year.
That maximum annual cost is then divided by the stress rate — not your real interest rate — to find the maximum loan: maximum loan = maximum annual mortgage cost ÷ (stress rate ÷ 100). The stress rate is deliberately higher than most real BTL rates so the loan still survives if rates rise.
Maximum property value = maximum loan ÷ (LTV ÷ 100) — dividing by your target loan-to-value tells you the most expensive property you could buy at that deposit level while still passing the stress test. The "actual pay rate" section further down then shows real monthly cashflow at the rate you'd genuinely be charged, which is usually lower than the stress rate.
Worked Example
A property expected to let for £1,200/month, tested by a lender at a 5.5% stress rate with a 145% ICR requirement, at 75% LTV.
- Annual rent: £1,200 × 12 = £14,400
- Maximum annual mortgage cost: £14,400 ÷ 1.45 = £9,931
- Maximum loan: £9,931 ÷ 5.5% = £180,564
- Maximum property value at 75% LTV: £180,564 ÷ 75% = £240,752
- Deposit required: £240,752 − £180,564 = £60,188
Despite the rent supporting a much larger loan at a real-world rate, the 5.5% stress test caps borrowing at £180,564 — a reminder that lenders size buy-to-let loans against the worst case, not the deal you're actually being offered.
Frequently Asked Questions
Why is the stress rate higher than the rate I'll actually pay?
Regulators require lenders to test buy-to-let affordability against a rate well above typical market rates — often 5.5% or product rate + 2%, whichever is higher — specifically so the loan remains serviceable if rates rise significantly after completion. It protects both the lender and you from being caught out by a rate shock.
Why do individual landlords face a 145% ICR but companies only 125%?
Since Section 24 restricts individual landlords to a 20% tax credit on mortgage interest rather than full deduction, higher and additional-rate taxpayers keep less of their rental income after tax — lenders compensate by demanding more rental cover (145%) to be confident the mortgage is serviceable. Limited companies deduct interest in full, so lenders are comfortable with a lower 125% requirement. See our Section 24 Tax Calculator for the full personal-vs-Ltd comparison.
Does a bigger deposit always increase how much I can borrow?
Not for this specific calculation — a lower LTV (bigger deposit) increases the maximum property value you can buy for a given maximum loan, but it doesn't change the maximum loan itself, which is driven entirely by rent, stress rate, and ICR. A bigger deposit buys a more expensive property, not a bigger mortgage.
What if my desired purchase price is higher than the maximum here?
The rent needs to be higher, the ICR requirement needs to be lower (a different lender or product), or you need a bigger deposit to buy the same property with a smaller loan. Increasing your deposit is usually the fastest lever, since it directly reduces how much you need to borrow against the same rent.
Does this replace speaking to a mortgage broker?
No — this gives you a realistic ceiling to work with before you start viewing properties or speaking to lenders, but actual offers depend on your income, credit profile, existing portfolio, and the specific lender's criteria. Use it to sense-check a deal, then confirm the real number with a broker.