Buy-to-let mortgage stress test calculator
Before a lender approves a buy-to-let mortgage they check two things: that you're not borrowing too high a share of the property's value, and that the rent would still cover the interest if rates rose — not at the rate you're being offered, but at a higher “stressed” one. This works through both the way a broker would, tells you the most you could borrow, and then answers the question the lender never asks: whether the property actually makes you any money once Section 24 has had its turn. No sign-up, and nothing you type leaves your browser.
75.0% LTV
Use the figure a surveyor would put on it, not a discounted rate for a friend or family.
Sets both the rental cover a lender wants and how the profit is taxed — the two work in opposite directions, which is why the answer isn't obvious.
Would fail the stress test
Your rent covers 127% of the interest at a stressed rate of 7.25%, against the 145% typically wanted for standard single let on an individual basis.
- Loan to value
- 75.0%
- Annual rent
- £13,800
- Interest when stressed
- £10,875
- Cover at your rate
- 175%
This would pass on a five-year fix
It only fails because a shorter product gets stressed at 7.25% instead of your actual 5.25%. Switch the fix length under “Deal details” to see it. This is the first thing a broker would suggest — the trade-off is being tied in for five years with early repayment charges.
How much you could borrow
£131,272
Capped by the rent, not the deposit — 75% LTV would allow £150,000, but the rental cover test stops you at £131,272.
Borrowing £10,000 less would take you to 70% LTV — lenders price in bands, so crossing one is often worth more than negotiating the rate.
What would make it pass
- Borrow less. A loan of £131,272 clears the test at this rent — that's £18,728 less than you've entered.
- Charge more rent. £1,314 a month would do it — only worth pursuing if the market genuinely supports it, since the lender uses the surveyor's figure, not yours.
- Top-slicing. Some lenders will use surplus personal income to bridge a shortfall — here about £164 a month of evidenced spare income. Not every lender offers it, and those that do run their own affordability check.
What it actually earns you
The lender's test says nothing about whether the property makes money. This does — after voids, costs, the mortgage, and tax.
- Gross annual rent
- £13,800
- Void allowance (4%)
- −£552
- Letting agent (10%)
- −£1,325
- Other running costs
- −£1,200
- Mortgage interest
- −£7,875
- Tax
- −£2,714
- Profit after tax
- £134(£11/mo)
- Gross yield
- 6.90%
- Net yield
- 5.36%
Section 24 is costing you £2,173 a year here
As an individual you're taxed on £10,723 — your profit before mortgage interest — and get a 20% credit of £1,575 back. The same property inside a limited company would clear £2,307 after corporation tax. Incorporating isn't free though: expect stamp duty and capital gains on the transfer, plus higher rates and accountancy. Worth an accountant's view, not a calculator's.
If rates move against you
Lenders' own stress rates have ranged roughly 5.5–7.5% in recent years. Cover at each, against your 145% threshold:
| Stress rate | Rental cover | Verdict |
|---|---|---|
| 5.50% | 167% | Passes |
| 6.00% | 153% | Passes |
| 6.50% | 142% | Fails |
| 7.00% | 131% | Fails |
| 7.50% | 123% | Fails |
What a broker would ask next
None of these change the arithmetic above, but any of them can change the answer:
- Do you have £25,000+ of income outside the property? Many BTL lenders set a minimum, and first-time landlords face tighter rules.
- How many mortgaged buy-to-lets do you own? At four or more you're a portfolio landlord and the whole book gets assessed, not just this property.
- Is this a purchase or a pound-for-pound remortgage? Many lenders apply a softer stress test when you're not borrowing anything extra.
- What will the surveyor say the rent is? Their figure is the one used, and it can come back under what you're actually charging.
- Anything unusual about the building — flat above a shop, ex-local authority, single skin, short lease? Each rules out a slice of the market.
- How old will you be at the end of the term? Most lenders cap the end age between 75 and 85.
Everything is worked out in your browser. Nothing you type is sent to us, saved, or needs an account.
The four things that decide a buy-to-let case
A broker gathers all of these before they'll give you an answer, because any one of them can sink an application on its own.
1. Loan to value — the first gate
Buy-to-let lending usually stops at 75% of the property's value. Go above it and the rental cover test never gets reached, because there's no product to apply it to. Below it, lenders price in bands — 75%, 70%, 65%, 60% — and dropping a band is frequently worth more than any amount of haggling over the rate. A product fee added to the loan counts toward your LTV, which is how a 75% case quietly becomes a 76.5% one.
2. The stress rate — and why five-year fixes are treated differently
Rather than using the rate you're actually paying, the lender assumes a worse one — conventionally the higher of your rate plus 2% or a floor of about 5.5%. A 5.25% deal therefore gets assessed at 7.25%.
The important exception: most lenders drop that loading for a five-year fix or longer, stressing at the pay rate itself with a floor of around 5%. The regulator's concern is a borrower being caught out by a rate rise, and a five-year fix largely removes it. In practice this is the single biggest lever available — a case that fails on a two-year product very often sails through on a five. The trade-off is being tied in, with early repayment charges if you need out.
3. The rental cover threshold
Your annual rent divided by the stressed annual interest has to reach a minimum percentage. For a basic-rate individual that's usually 125%. For a higher or additional-rate taxpayer, or a limited company, it's usually 145% — the extra headroom reflects that mortgage interest relief works differently for them. HMOs, multi-unit blocks and holiday lets are generally held to at least 145% whatever your tax position, and large HMOs can be asked for considerably more.
If you fall short, borrowing less is the reliable fix. Some lenders will also consider top-slicing — using evidenced surplus personal income to bridge the gap — though not all offer it, and those that do run their own affordability assessment on top.
4. Whether it makes money — the bit the lender doesn't check
Passing a stress test only means a lender will advance the money. It says nothing about whether the property is worth owning. Since Section 24 finished phasing in, an individual landlord can no longer deduct mortgage interest from rental profit — you're taxed on profit before interest, then handed a 20% basic-rate credit against the bill. For a higher-rate landlord on a large loan that can be the difference between a few hundred pounds a year and nothing at all.
A limited company deducts interest in full and pays corporation tax on what's left, which is why so many landlords have incorporated. It isn't a free move — transferring an existing property can trigger stamp duty and capital gains tax, company mortgage rates run higher, and you take on accountancy costs plus the question of how to get money back out. The calculator above shows the gap on your own numbers; an accountant should tell you what to do about it.
Where this stops being useful
Every figure here is a market convention, not a rule. Lenders set their own stress rates, cover thresholds and LTV ceilings, which is exactly why a case that fails at one passes at another — and why a whole-of-market broker earns their fee. Treat this as a well-informed starting position, not a decision.
Common questions
- What is the interest cover ratio (ICR) on a buy-to-let mortgage?
- ICR is your annual rental income divided by the annual mortgage interest, expressed as a percentage. An ICR of 145% means the rent covers the interest one and a half times over. Lenders use it to judge whether a property pays for its own borrowing with room to spare.
- What rate do buy-to-let lenders stress test at?
- Most UK lenders converged after 2017 on stressing at whichever is higher of your pay rate plus 2%, or a floor of around 5.5% — so a 5.25% deal is typically assessed at 7.25%. Some lenders stress five-year fixed deals at the pay rate alone, which can make a longer fix easier to get.
- Is the ICR threshold 125% or 145%?
- 125% is the usual minimum for an individual basic-rate taxpayer. Higher and additional-rate individuals, and limited companies, are generally held to 145%, because tax relief on mortgage interest doesn't reduce their exposure in the same way. Individual lenders set their own figures, and some go higher.
- What happens if my buy-to-let fails the stress test?
- You generally have three levers: borrow less, so the interest falls; increase the rent, if the market supports it and you follow the correct notice procedure; or find a lender with a more forgiving assessment, such as one that stresses five-year fixes at pay rate. This calculator shows the rent and loan figures that would tip your case over the line.
- What is the maximum LTV on a buy-to-let mortgage?
- Most buy-to-let lending caps at 75% loan to value, so a 25% deposit is the practical minimum. A few lenders reach 80%, and specialist products go higher at a materially worse rate. Remember that a product fee added to the loan counts toward the LTV.
- Why do five-year fixed buy-to-let mortgages pass the stress test more easily?
- Because most lenders drop the +2% stress loading on a five-year fix, assessing at the pay rate itself with a floor of around 5%. A borrower fixed for five years is insulated from rate rises for long enough that the regulator's concern largely falls away. A case that fails on a two-year product often passes on a five-year one with no other change.
- What is top-slicing on a buy-to-let mortgage?
- Top-slicing is where a lender allows surplus personal income to make up a shortfall in rental cover, rather than refusing the case outright. Not every lender offers it, and those that do will assess your wider affordability and want the surplus income evidenced.
- Is it better to buy a rental property through a limited company?
- It depends on your tax position and how long you will hold the property. A company deducts mortgage interest in full and pays corporation tax, while an individual is taxed on profit before interest with a 20% credit — so the higher your tax band and the larger your mortgage, the more a company saves. Against that, company mortgage rates are higher, transferring an existing property can trigger stamp duty and capital gains tax, and you take on accountancy costs and the question of extracting profits. This is an accountant's question, not a calculator's.
- Does this calculator store what I enter?
- No. The calculation runs entirely in your browser. Nothing you type is sent to a server, saved, or tied to an account, and you don't need to sign up to use it.
Want to be told before your deal ends?
The awkward part isn't running the numbers once — it's remembering to run them again six months before your fix expires, on every property. LetBuddy tracks that alongside your gas, electrical, and EPC deadlines and tells you when it's time to act.
Portfolio ICR
163%
At a 5.5% stress rate
Deals ending
2
Within 6 months
On SVR
1
Costing you now
By deal expiry
9 Merchant Lane
ICR 118% · fix ended 11 Jun 2026
4 Bellfield Road
ICR 141% · fix ends 30 Dec 2026
12 Oak Street
ICR 172% · fix ends 14 Dec 2028
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Indicative only. This is not a mortgage offer, a decision in principle, or financial advice — lenders set their own stress rates and cover thresholds, and their assessment is the one that counts. Speak to a mortgage broker before making a decision.