Interest Only Buy to Let Mortgage Calculator
Use this interest only buy to let mortgage calculator to work out the monthly interest payment on a rental property, and whether the rent covers it. Interest-only is the most common structure for buy to let, because the loan balance stays the same and is repaid when the property is sold or refinanced.
Calculator
How to use this calculator
- Enter the property price and your deposit to get the loan and LTV.
- Enter the interest rate and the expected monthly rent.
- Click Calculate to see the monthly interest payment, the annual interest, the gross yield and the interest cover ratio.
Worked example: a £220,000 property with a £55,000 deposit gives a £165,000 loan at 75% LTV. At 5.25% the interest-only payment is about £722 per month, and £1,100 of rent gives a 6.00% gross yield and an interest cover ratio of about 1.52x.
Frequently Asked Questions
How is an interest only buy to let payment calculated?
Monthly interest equals the loan amount multiplied by the annual rate, divided by 12. For example, £165,000 at 5.25% is £8,662.50 a year, or about £722 a month.
What is a good interest cover ratio?
Lenders set their own minimums, often around 1.25x to 1.45x after a stress test at a higher rate. A higher ratio means more headroom if rates rise or rent falls.
Do I ever repay the loan itself?
Yes, eventually. The loan is repaid when you sell the property, remortgage onto a repayment deal, or pay it off from other funds. The balance does not fall while you pay interest only.
Interest only vs repayment buy to let: which costs less per month?
Interest only is cheaper per month, but you repay nothing, so the total interest over the full term is higher than on a repayment mortgage.