keys icon

Buy-to-Let Rental Yield Calculator

Ideal for first-time and existing buy to let landlords, our buy to let calculator is designed to calculate expected rental yield. Expressed as a percentage, its crucial to know what return you can expect on your investment before you search and apply for a buy to let mortgage. The calculator is straightforward and allows you to experiment with monthly or yearly parameters to see which buy to let option suits you best. Please note, the calculator is intended to give an indication only.

Advertisement

Rental Yield Calculator

Press for help tip
£
Press for help tip
£
Press for help tip
Your Result

Ready to discover the best BTL mortgage rates?

Choose a buy to let category below and start comparing providers today. Alternatively, speaking to a qualified mortgage broker can be advantageous, especially if you are a first time landlord. 

First time landlord

Buy to let limited company

Compare all buy to let mortgages

 

How are buy-to-let mortgages priced?

Buy-to-let mortgage rates are priced based on your loan-to-value (LTV) and the duration of the mortgage deal. Usually, the cheapest buy-to-let mortgages are those with the lowest LTV of 60% and shorter deal terms (avoiding the lender’s standard variable rate).

Lenders treat mortgages for a rental property as a higher risk than a residential mortgage. This means buy-to-let mortgages generally have a higher minimum deposit of 20% and come with higher interest rates and fees compared to residential mortgages.

 

Should I speak to a mortgage broker?

Mortgage brokers remove a lot of the paperwork and hassle of getting a mortgage, as well as helping you access exclusive products and rates that aren’t available to the public. Mortgage brokers are regulated by the Financial Conduct Authority (FCA) and are required to pass specific qualifications before they can give you advice.

 

Speak to an award-winning mortgage broker today

 

MAB is the preferred mortgage broker of MoneyfactsCompare

 

Mortgage Advice Bureau logo

Get friendly, expert advice free of charge as a visitor of MoneyfactsCompare

Mortgage Advice Bureau have 1,600 UK advisers with 200 awards between them.

Speak to an award-winning mortgage broker today.

Call 0808 149 9177 or request a callback

Mortgage Advice Bureau offers fee free mortgage advice for MoneyfactsCompare visitors that call on 0808 149 9177. If you contact Mortgage Advice Bureau outside of these channels you may incur a fee of up to 1%. Lines are open Monday to Friday 8am to 8pm and Saturday 9am to 1pm excluding bank holidays. Calls may be recorded.

Your home may be repossessed if you do not keep up repayments on your mortgage.

How much can I borrow on a buy-to-let mortgage?

Mortgage lenders usually require your rental income to be at least 125% of your monthly mortgage payments or mortgage interest. Some lenders may require a higher minimum rental income sometimes over 145%. As part of this calculation, lenders will use a managed rate and not your actual mortgage product rate to calculate your monthly buy-to-let mortgage payment – in a lot of cases, this is 5.5%. You will also need to meet the lender’s minimum salary requirements.

What is a good return on a buy-to-let mortgage?

You can use three different calculations to find out if your property investment is paying a satisfactory return. These are rental yield, return on investment and cash on cash.

How is rental yield calculated?

To work out rental yield, you take the annual rent divided by the value of the investment property multiplied by 100.

Rental yield = (Annual rent / property value) x 100

For example, a £250,000 property earning £860 per month in rent would achieve a 4.16% yield.

How is return on investment calculated?

Your return on investment is calculated by calculating your earnings less your cost of investment, divided by the cost of investment. Then multiplied by 100 to get a percentage.

Return on investment = (Total of earnings – cost of investment) / cost of investment x 100

This calculation is very simplified and is not specific to buy-to-let investments

How to calculate cash on cash returns for your buy-to-let property

This calculation allows you to see the return on your initial cash investment less your monthly mortgage payments.

Cash on cash return = (Net annual cash flow/total cash invested) x 100

Cash invested includes any deposit you needed for the mortgage, any additional fees connected to your investment and any costs for work or refurbishments made to the property.

Net annual cash flow is your annual rental income less your annual mortgage payments.

For example, you invest £50,000 as a deposit for your buy-to-let mortgage and spend £10,000 in renovations. Your total cash invested is £60,000. You pay £350 per month for your buy-to-let mortgage and receive £860 in rental income. Your net annual cash flow is £6120. Your cash on cash return would be 11.4%.

Why is it important to calculate your investment return as a buy-to-let landlord?

Rental yield is a measure of your annual return on your buy-to-let investment. You can use it to compare it to the rates of return on other investments such as savings accounts and to check your investment is outperforming inflation.

What is a good return on a buy-to-let property?

A good rental yield varies depending on the location of the property due to property costs and the health of the rental market. The top 25 locations for rental yield in the UK achieve between 6.99% and 10.00%. Source – Totally Money Buy to Let Yield Map 2019/20.

What is the best buy-to-let mortgage for you?

Finding the right buy-to-let mortgage depends on the circumstances of your property and yourself. You may find that to be eligible for some buy-to-let mortgages that you need to be an experienced landlord rather than a first-time landlord. Some lenders will not accept properties of unusual construction type, including flat and thatched roofs while others may have rules about local authority properties or flats above commercial premises. Some lenders also restrict multiple properties or houses of multiple occupation. 

You can find the right buy-to-let mortgage either by researching the market directly using our buy to let comparison table or by speaking to our preferred mortgage broker.

 

 

Receive the latest news, straight to your inbox

All of our newsletters are available free by email to all Moneyfactscompare.co.uk users.

Send me Weekend Moneyfactscompare, Savers Friend, Companies Friend and selected third-party offers.

How Moneyfactscompare works

  • drawing of money scales

    BALANCED. Moneyfactscompare.co.uk is entirely independent and authorised by the Financial Conduct Authority for mortgage, credit and insurance products.

  • blue outline of free tag

    FREE. There is no cost to you. Our service is entirely free and you don't need to share any personal data to access our comparison tables.

  • drawing of pound sign and arrow

    TRANSPARENT. We only receive payment from product providers and intermediaries for apply online links and adverts through to their websites.

  • blue outline of binoculars

    COMPREHENSIVE. We research the whole market and scour the small print so you can find the best products for your needs.

Moneyfactscompares guides

More guides
guides icon
Repay your mortgage or contribute to your pension? A UK guide

Deciding whether to increase your mortgage payments or pension contribution can have a significant effect on your finances. As a starting point, our preferred independent financial adviser company Kellands encourages consumers to align their mortgage term with their preferred retirement date.

Deciding whether to increase your mortgage payments or pension contribution can have a significant effect on your finances.

Read More
guides icon
Overseas Mortgages Explained

You must get an ‘overseas mortgage’ to purchase a house abroad – normally from a lender in the country you want to purchase in.

You must get an ‘overseas mortgage’ to purchase a house abroad – normally from a lender in the country you want to purchase in.

Read More
guides icon
What are mortgage exit / redemption fees?

Borrowers may not realise that many mortgage providers charge exit/redemption fees. Read our complete guide to find out more.

Borrowers may not realise that many mortgage providers charge exit/redemption fees. Read our complete guide to find out more.

Read More
guides icon
Tips on finding the best estate agent

Your choice of estate agent can play a crucial part in the process of buying or selling a property. Take your time and make sure that you know exactly what services are being offered. Our helpful guide explains what to look for.

Your choice of estate agent can play a crucial part in the process of buying or selling a property. Our helpful guide explains what to look for.

Read More

Ask us anything