Ltd Company Buy to Let Mortgage Calculator UK
As a landlord looking to expand your portfolio, or a new property investor wanting to understand the costs, our buy to let mortgage calculator UK is a handy tool to help you evaluate which products in the mortgage market are the most competitive. The mortgage calculator for limited company director applicants is also simple to use and has the flexibility to amend the factors to see how each option compares.
Calculating the cost of an HMO buy-to-let mortgage
When you purchase a rental property, your loan-to-value ratio is essential - this is the proportion of the total property value that your mortgage is financing and will need to use our buy to let mortgage calculator UK.
Another crucial factor is the term of the loan - the lower the LTV ratio and the shorter the deal on offer, the cheaper the mortgage. Longer-term mortgages cost less per month but tend to be ultimately more expensive, particularly when the fixed-term period ends and the lenders' standard variable rate kicks in.
Buy-to-let mortgages are generally higher risk than lending against residential properties. As such, you will find through our buy to let mortgage calculator UK that the fees and interest rates payable are usually higher, and typically lenders will demand a minimum 20% deposit.
Deciding how much to borrow through a buy-to-let mortgage
Depending on their criteria, you’ll see on our buy to let mortgage calculator UK that most lenders will consider applications where the anticipated rental income is at 125% of the expected mortgage repayments per month.
These criteria vary throughout the market, and other lenders will demand a rental income of 145% and higher, than your monthly payments.
To assess each application, lenders of buy-to-let mortgages use something called a 'managed rate', rather than the actual interest rate chargeable. That rate is usually 5.5%.
As well as the affordability assessments, many landlords will have to meet a minimum turnaround threshold to be accepted, irrespective of the figures given by a buy to let mortgage calculator UK.
What would it cost me to take out a £100k rental property mortgage?
Let's look at a buy to let mortgage calculator UK scenario - you are buying buy-to-let property and need a mortgage of £100,000.
An interest rate of 1.39%
Fixed term of two years
LTV is 60%
On this deal, you might expect to pay a £1,499 arrangement fee, and the total cost over the two years would be £10,974.
You can use this sort of calculation via a buy to let mortgage calculator UK to apply to rental mortgages with a 25-year term.
How can I work out the return via a mortgage calculator for limited company director applicants?
Rental properties are a business investment, and so it is crucial to understand what return they would achieve. To help work out your return, you can work on three different bases when using a buy to let mortgage calculator UK:
Rental yield
Return on investment
Cash on cash
Calculating return on investment for an HMO buy to let purchase through a mortgage calculator for limited company director applicants.
Rental yield is worked out by taking the rental income per annum, dividing this by the value of the property, and multiplying by 100 to reach a percentage.
The buy to let mortgage calculator UK sum looks like this: (annual rent/property value) x 100.
For example, a £250,000 property generating £860 a month rent would make a 4.12% rental yield - £10,320 income divided by £250,000 property value, multiplied by 100.
Calculating return on investment for an HMO buy to let purchase
Return on investment, or ROI, is calculated by adding up your total income, less the cost of the purchase, and dividing by that cost before entering it into a buy to let mortgage calculator UK. Multiplying this figure by 100 will show you the comparable percentage. Bear in mind that this is a straightforward indicative calculation.
The calculation looks like this: (total earnings/investment cost) / investment cost x 100.
Calculating cash on cash return
Your cash on cash return works out all of the cash costs and income involved. The total money invested includes your deposit, the cost of the purchase, and any other expenses involved in refurbishing the property – you can add this up before using a buy to let mortgage calculator UK.
Net annual cash flow is the total rental income you will receive each year, less the cost of your monthly mortgage repayments.
The calculation looks like this: (net annual cash flow/cash invested) x 100.
For example, a buy to let mortgage calculator UK might show that:
If you invest £50,000 as a deposit and spend £10,000 modernising an investment property, your total cash investment is £60,000.
On a buy-to-let mortgage repayment of £350 per month, and rental income of £860 per month, you will make net annual cash flow of £6,120.
This investment, therefore, produces a cash on cash return of 10.2% - £6,120 / £60,000 x 100.
Why returns are relevant on buy-to-let investments
Making sure that your investment will be profitable is essential to a rental landlord. Likewise, being able to compare different rates of return on different products means being able to choose the most cost-effective options.
What sort of return would I expect to make on a rental investment?
Returns on investment for buy-to-let properties vary significantly in different areas and depending on the demand for rental properties and the average house price at the time you invest – a buy to let mortgage calculator UK can give you a rough indication.
Typically, the most profitable rental properties in prime UK locations achieve between 6.9%-11.99% rental yield.
How do I choose the best buy-to-let mortgage terms?
Choosing a mortgage is all about considering your circumstances and selecting the right investment property with the right financing through a buy to let mortgage calculator UK.
Some buy-to-let lenders favour experienced landlords, some have particular criteria about the types of property they will lend against, and others do not deal with flats or commercial investments – making it essential to consult a professional after using a buy to let mortgage calculator UK.
To ensure you find the best buy-to-let mortgage and receive independent advice about the most competitive financing deals, give Revolution Finance Brokers a call today, or drop us a line at [email protected].
How reliable is a buy to let mortgage calculator UK?
A buy to let mortgage calculator UK is a useful tool to help you get a rough idea of what you could borrow, at what interest rate. However, a buy to let mortgage calculator UK works on averages and standard terms and won’t be as precise as the information provided via a broker.
Our recommendation is to consider a buy to let mortgage calculator UK as an indication, rather than a decisive way to find out whether you are eligible for your desired financing.
What information will I need to use a buy to let mortgage calculator UK?
We designed our buy to let mortgage calculator UK to be user-friendly, so you can follow the prompts and then simply click the calculate button.
To use a buy to let mortgage calculator UK you’ll need to know the type of application, the interest cover ratio, the property purchase price and the rental income. From there, the buy to let mortgage calculator UK will provide calculations for your perusal.
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