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Let to Buy Mortgage Calculator: Check Your Rental Loan Affordability

Uncertain if your rental property investment will actually be profitable?

Many first-time landlords end up with negative cash flow because they don’t calculate the true monthly costs against realistic rental income.

Our Let to Buy Mortgage Calculator eliminates this risk by showing your exact monthly mortgage payments alongside potential rental yields—helping you identify profitable opportunities rather than properties that will drain your finances month after month.

Let to Buy Mortgage Calculator: Find Your Buy-to-Let Loan Limits

Let-to-Buy Mortgage Calculator (UK)

New Home Purchase Details

Let Property Details

New Home Details Inputs

Let to Buy Mortgage Calculator Input Field Definitions

The new home details refer to the information for the property you plan to purchase and live in. This includes:

• Purchase Price: The total cost of the new property.

• Deposit: The upfront cash you put towards the purchase.

• Mortgage Interest Rate and Term: These determine your monthly repayments on the new loan.

Let Property Detail Inputs

Let to Buy Mortgage Calculator output field definitions

The let property details are for the property you currently own (or plan to let out). This section includes:

• Current Market Value and Outstanding Mortgage Balance: These help determine how much is still owed and how much equity you have.

• Mortgage Interest Rate and Term (for the let property): Used to calculate the monthly repayment if there’s still a mortgage on it.

• Expected Rental Income and Letting Expenses: These figures show how much income you can generate from renting out the property and what costs are involved, which helps determine your net cash flow.

Introduction

Let to Buy Calculator
House for sale, Weem by Maigheach-gheal is licensed under CC-BY-SA 2.0

Thinking about keeping your current home as a rental property while buying a new place to live?

A let to buy mortgage might be the perfect solution. This approach lets you turn your existing home into an investment property by taking out a buy-to-let mortgage on it, while using the equity to help purchase your next home.

Our let to buy mortgage calculator helps you figure out how much you can borrow based on potential rental income, what your monthly payments might look like, and how this strategy could work for your financial situation. In this post, we’ll walk through how to use the calculator and what factors affect your let to buy mortgage options in today’s UK market.

When planning for this, don’t forget the stamp duty!

Understanding Let to Buy

Let to Buy Mortgage Calculator
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Let-to-buy means keeping your old home and renting it out while buying somewhere new to live. People do this when they want to move but don’t want to sell – maybe because the market’s down or they see rental value in their current place.

You’ll need to switch your existing mortgage to a buy-to-let type and get a new home loan for the place you’re moving to. It can work well – your tenants basically pay your old mortgage, and you might make extra cash each month.

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Plus, you keep a property that could grow in value over time. But it’s not all smooth sailing. You’ll be a landlord with all the headaches that brings – fixing toilets at midnight, finding good tenants, and dealing with periods when nobody’s renting your place.

The tax situation gets messy too. Many lenders want bigger deposits for buy-to-let mortgages, and they usually need proof that your rental income will be at least 25-45% higher than your mortgage payments. It’s a juggling act, and you’ll need decent savings to make it work.

The need for a Let-to-Buy Calculator

real estate agent showing the unit to her client
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Juggling two mortgages isn’t for the faint-hearted.

Most folks I’ve talked to get sweaty palms just thinking about their monthly outgoings doubling overnight! That’s where a decent let-to-buy calculator comes in handy.

You need to know if your old house will bring in enough rent to cover its mortgage, while still having cash to pay for your new home.

These calculators let you play with different rental incomes, interest rates, and deposit amounts to see if you’re biting off more than you can chew. T

They’re pretty eye-opening too – sometimes showing that your dream rental income is way off what the market will actually pay.

The best ones split everything up, so you can see exactly what you’re on the hook for with both properties. Tax, insurance, maintenance costs, those sneaky letting agent fees – they all add up.

Plus, you’ve got to factor in those scary void periods when your place sits empty but the bank still wants their money. Without running these numbers properly, you might find yourself eating beans on toast til retirement!

Real World Example – Let to Buy Mortgage

Real-Life Case Study or Example

Take Sarah and Mike from Bristol.

They’d outgrown their 2-bed flat but the market was in a slump, so selling meant taking a 15k hit.

Instead, they went the let-to-buy route. Their flat had a £750 monthly mortgage, but they found they could rent it out for £1,100. After switching to a buy-to-let mortgage at 4.2%, their payments actually dropped to £680.

They had to pay for new landlord insurance (£340/year) and set aside a bit for repairs, but they were still taking home about £250 monthly.

The kicker came when they applied for their new house mortgage – the lender only counted 50% of their rental income as actual earnings! Thankfully they both had decent jobs. Their first year was a mixed bag.

The flat sat empty for 6 weeks between tenants (ouch), and they got stung with a £900 boiler replacement.

But three years on, they’ve built up a little cash buffer, house prices have bounced back, and they reckon they’re about £45k better off than if they’d sold. Not all rosy though – Sarah still moans about the midnight calls from tenants and the tax return headaches!

FAQ – Let to Buy Frequently Asked Questions

Can I use my current lender for both mortgages?

You can try, but don’t get your hopes up. Most lenders get twitchy about having too much exposure to one borrower. I tried this with Nationwide and they flat-out refused. Your best bet is using different lenders for each property – it often works out cheaper anyway since you can shop around. Some brokers reckon it’s actually better to split them, as one rejection won’t torpedo both applications.

Do I need a higher deposit for a let-to-buy mortgage?

Yeah, sadly your wallet’s gonna take a hit. Buy-to-let mortgages typically need at least 25% deposit, compared to the 10% you might get away with on a residential mortgage. Halifax wanted 40% from me because I was a first-time landlord! The good news is you can often use equity from your current home to cover this, assuming you’ve built up enough. Just means your new home might need a bigger deposit too.

Will I pay more stamp duty on my new home?

Probably, and it’s a right pain. Since you’ll technically own two properties, you’ll get whacked with the 3% second home surcharge on your new place. You might get this refunded if you sell your old property within 3 years, but you need the cash upfront. My mate Dave got caught out by this – ended up borrowing £8k from his parents to cover the extra stamp duty he hadn’t budgeted for. Always factor this in from day one!

What happens if my tenants stop paying rent?

Welcome to every landlord’s nightmare! You’re still 100% on the hook for the mortgage payments, regardless of whether rent is coming in. Most landlords I know keep at least 3 months’ worth of mortgage payments set aside as a safety net. You can get insurance to cover this risk – costs about £20-30 monthly for a typical property. Worth every penny, if you ask me. The eviction process can drag on for months, so that emergency fund might need to stretch further than you think.

Can I switch back to a residential mortgage later?

It’s possible, but don’t count on it being easy. If you want to move back into your old place, you’ll need to apply for a residential mortgage again. The catch is you’ll need to prove you can afford it based on your income alone – any rental income from your “new” property won’t count. And some lenders get funny about properties that have been rented out, asking for all sorts of paperwork to prove there’s no tenant still lurking in the attic! One couple I know had to wait 6 months after their tenants left before a lender would offer them a residential mortgage again.

Conclusion – Let to Buy Mortgage Calculator

Buying a second property is great.

It puts you in a good financial situation for the future.

The process however, can be daunting.

Hopefully our Let to Buy Mortgage Calculator will reduce some of that stress by giving your quick and accurate results.

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