Buy-To-Let Mortgages: Working out Rent and Costs

How much can you borrow on a buy-to-let mortgage? How much rent should you charge? Check out our brief guide below for more information.
Buy-To-Let Mortgages: Working out Rent and Costs


The amount you can borrow on a buy-to-let mortgage is usually determined by two principal factors: the rental income you expect to generate; and loan-to-value restrictions on the value of the property.


Rental Income

As a new landlord, the amount you can borrow will almost certainly be linked to the rental income you expect to receive from the property once it is tenanted. It is therefore useful to investigate the realistic rental prices for the type of property in the area it is located.


Lenders usually prefer that rental income exceeds the mortgage repayment by about 25%.


A proportion of this rental income is expected to go towards costs such as maintenance, insurance, and agents’ fees. It will also cover periods when the property is vacated between tenants. (Find out more on our buy-to-let mortgage page.)



The amount that you can borrow is also normally limited to a maximum of 75% of the property value, which is more restrictive than most other mortgage types.


Landlord mortgages usually require a deposit of at least 25%. Only if you have a successful history of managing buy-to-let properties are you likely to receive any significant flexibility on this, as lenders may deem you a lower risk applicant.


This might affect the rent you need to charge to make the property affordable.


Modern Home


How Much Rent to Charge?

So, what might determine the amount of rent you need to charge?


Size of the Loan

As described above, the amount you can borrow is normally linked to the rental income you expect to receive, though lenders often expect rental income to exceed the mortgage payment by about a quarter.


Property Type and Area

There is a careful negotiation to be made when setting the level of rent on your property.


If you set the rent amount too low, you are unlikely to maximise the investment on the property. Setting the level too high, on the other hand, risks pricing yourself out of the market and leaving the property untenanted.


Property Value

Deposit (25%)

Rent Required (*)






















(*) Rent calculations generated by London & Country's mortgage calculator.


Check out our buy-to-let mortgage page for more information and for the latest deals.


As always, we recommend that you seek professional advice if you are unsure which type of mortgage is right for you and that all of the information provided above is for use as an overview only and should not be the basis for your mortgage decision.


Keith McDonald

Which4U Editor

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