Interest-Only Buy-to-Let Mortgage Calculator
Work out the monthly interest payment on a buy-to-let property, the annual interest, gross yield and interest cover ratio.
Enter your details below.
How to use
- Enter the property price and your deposit to get the loan and loan-to-value.
- Enter the interest rate and the expected monthly rent.
- Click Calculate Interest-Only Payment to see the monthly interest, annual interest, yield and cover ratio.
About this tool
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, which keeps the monthly bill low and the cash flow high. The payment is simply the loan times the annual rate divided by 12, and the interest cover ratio is the monthly rent divided by that payment. This calculator also shows the gross yield, and the balance that remains owing at the end, which is the full loan. Interest-only is cheaper per month than repayment but the total interest over a full term is higher, since nothing is ever repaid along the way.
Frequently asked questions
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.
Related tools
All tools · Read the guide: Interest-Only Buy-to-Let Mortgage Calculator