Typically ~1.5% higher than residential.
UK BTL deposits usually 25%+.
What is a buy-to-let mortgage?
A buy-to-let mortgage funds a property you intend to let, not live in. Deposits are usually 25% or more, and the rate is typically about 1.5 percentage points above an equivalent residential mortgage. Most buy-to-let loans are interest-only, so the monthly payment covers interest and the capital is repaid when you sell or remortgage.
Lenders judge the loan mainly on the rent, using an interest-cover test, rather than on salary alone. Basic-rate taxpayers are often assessed at 125% cover and higher-rate taxpayers at 145%. Living in the property would breach the mortgage terms. This calculator estimates the loan, payment and rental cover from the figures you enter. It does not confirm that a lender will agree the mortgage.
A £250,000 UK buy-to-let generating £1,200/month rent covers a £859 interest-only mortgage payment, leaving £341 gross monthly cashflow — a 5.76% gross yield.
How UK BTL mortgages work
Deposit & rate
Minimum 25% deposit on high-street BTLs; 40%+ unlocks sharp rates. BTL rates price ~1–2% above residential because of higher lender risk.
Rent cover (ICR)
Lenders stress rent against the mortgage — usually at 5.5% or pay rate + 2%. Need 125% for basic-rate taxpayers, 145% for higher-rate. See the BTL stress-test calculator.
Frequently asked questions
How much deposit do I need for a buy-to-let?
UK BTL lenders typically require a minimum 25% deposit (75% LTV). A 40% deposit unlocks the sharpest rates. Specialist lenders may accept 15–20% but at a rate premium.
Why are BTL mortgages interest-only?
Most BTLs are interest-only because it maximises tax-efficient cashflow and lenders underwrite on rent coverage, not capital repayment. The property sale typically repays the loan.
What is rent cover / ICR?
Interest Coverage Ratio — the ratio of rent to mortgage interest. Lenders require 125%+ for basic-rate taxpayers and 145%+ for higher-rate. Typically stress-tested at 5.5% or the pay rate + 2%.
What is a good BTL gross yield?
4–6% in London and the South East, 6–10% in the Midlands and North, 10%+ in specialist lets like HMOs. Gross yield ignores costs; net yield after costs is typically 2–3% lower.
Can I live in my BTL property?
No. Living in a BTL-mortgaged property breaches the terms and could be treated as mortgage fraud. You'd need to remortgage onto a residential product first (or a let-to-buy if the move is temporary).
Reviewed by the Mortgage118 editorial team. Net cashflow excludes tax, voids, management, insurance and maintenance. This calculator provides an estimate only and does not constitute mortgage advice.
- Mortgage type
- Interest-only
- Min deposit
- 15%
- Typical rate premium
- +1.5% vs residential
- Yield basis
- Gross (rent ÷ price)
Net cashflow excludes tax, voids, management, insurance and maintenance.