Buy-to-Let Calculator 2026/27
A £200,000 buy-to-let with 25% deposit at 5.5% interest costs about £688 per month interest-only. At £950 rent, gross yield is 5.7% and monthly cash profit about £162 before costs. Stamp duty on a £200,000 BTL purchase is £11,500 including the 5% surcharge. Enter your details below.
Figures verified against HMRC SDLT rates on .
Written by James HartleyCIMA
Calculator
Results
Monthly cash profit (interest-only)
£22.60
Gross yield: 5.70% · Net yield: 4.26%
- Loan Amount£150,000
- LTV75.00%
- IO Monthly Payment£687.50
- Annual Cash Flow£271
BTL mortgages above 75% LTV carry significantly higher interest rates. If possible, a larger deposit could reduce your monthly payments and improve cash flow.
Your monthly profit is under £200. A single month of void, an emergency repair, or an interest rate rise could push you into negative territory. Build a contingency fund of at least 3 to 6 months' costs.
Your stamp duty of £11,500 (including 5% BTL surcharge) is a sunk cost that reduces your true return on investment. Include this when calculating payback period.
These insights are generated based on your inputs and general UK financial guidelines. They do not constitute personal financial advice. Always consult a CIMA-qualified accountant or FCA-regulated adviser before making financial decisions.
Monthly Profit
£22.60
interest-only basis
Gross Yield
5.70%
before costs
Net Yield
4.26%
after costs
Annual Costs
£2,879
excl. mortgage
Stamp Duty (SDLT)
+5% BTL SurchargeBuy-to-let properties incur a 5% SDLT surcharge on top of standard residential rates (April 2026 rates applied).
Interest-Only vs Repayment
| Interest-Only | Repayment | |
|---|---|---|
| Monthly payment | £687.50 | £921.13 |
| Annual payment | £8,250 | £11,054 |
| Monthly profit | £22.60 | -£211.03 |
Interest-only is more common for BTL as it maximises monthly cash flow, but does not reduce the loan balance.
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How Buy-to-Let Calculator 2026/27 Works
How the BTL Calculator Works
Enter your property value, deposit, mortgage details, and expected rental income plus annual costs. The calculator computes both interest-only and repayment monthly payments, gross and net rental yields, monthly cash flow, and the stamp duty due, including the mandatory 5% additional property surcharge for buy-to-let purchases.
Gross vs Net Rental Yield
Gross yield = (annual rent ÷ property value) × 100. It ignores all costs and is useful for quick comparison between properties. Net yield deducts management fees, insurance, maintenance, and void periods before calculating the return. Net yield is the more realistic measure of actual profitability.
Interest-Only vs Repayment BTL Mortgages
Most buy-to-let investors choose interest-only mortgages to maximise monthly cash flow. With interest-only, you only pay the interest each month. The capital balance stays the same until you sell or refinance. Repayment mortgages reduce the loan over time but require higher monthly payments, reducing your cash profit.
Stamp Duty on Buy-to-Let Properties
Buy-to-let and second homes incur a 5% SDLT surcharge on top of standard residential rates (from October 2024, increased from 3%). This applies to the full purchase price. The calculator automatically applies this surcharge using the April 2026 SDLT bands.
Section 24 Tax Note
This calculator shows pre-tax cash flow. Individual landlords are subject to Section 24 restrictions, meaning mortgage interest is no longer deductible from rental income. Only a 20% basic rate tax credit is available. Higher-rate taxpayers should factor in the significant additional tax cost. Always consult a tax adviser before purchasing a BTL property.
Making Tax Digital for Landlords
From April 2026, landlords with gross rental income over £50,000 must comply with Making Tax Digital, keeping digital records and filing quarterly with HMRC. If you fall into this category, factor in the cost of compatible software and the additional administrative burden when assessing BTL profitability.
Frequently Asked Questions
Most buy-to-let mortgages require a minimum deposit of 25%, giving a maximum LTV of 75%. Some specialist lenders will accept 20%, but the most competitive rates typically require 35 to 40% deposit. Unlike residential mortgages, BTL is treated as a commercial lending decision, so lenders are generally stricter on deposit requirements.
Buy-to-let mortgage rates are typically 0.5-1.5% higher than equivalent residential rates. This reflects the higher risk to lenders, as landlords are more likely to default if rental income drops. BTL mortgages are also assessed differently - most lenders require the rental income to cover 125-145% of the monthly interest payment (the 'interest coverage ratio').
Gross rental yield = (annual rent ÷ property value) × 100. Net yield deducts annual costs (mortgage interest, management fees, insurance, maintenance, void periods) before dividing. A gross yield of 5 to 7% is generally considered good for UK BTL, though net yields of 2 to 4% are more typical after costs. Northern cities like Manchester, Liverpool and Leeds typically offer higher yields than London (3 to 4%).
Section 24 (fully phased in since April 2020) restricts mortgage interest relief for individual landlords. Instead of deducting all mortgage interest from rental income before tax, landlords now receive a basic rate (20%) tax credit only. This means higher-rate taxpayers in particular can face a much larger tax bill - sometimes even showing a profit for tax purposes while making a real cash loss. Holding property in a limited company avoids Section 24, as companies can still deduct mortgage interest as a business expense.
Since Section 24 restricted mortgage interest relief for individual landlords, many investors use a limited company (Special Purpose Vehicle) to hold BTL property. Companies pay corporation tax (19-25%) on profits and can deduct mortgage interest in full. However, extracting profit as salary or dividends creates additional tax. There's no universal answer: the optimal structure depends on your income tax rate, number of properties, long-term exit plans, and professional advice from an accountant.
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Related Guides
Buy-to-Let Tax Changes 2025: Section 24 and What Landlords Need to Know
Section 24, the 5% stamp duty surcharge, and rising CGT rates are reshaping BTL profitability.
Read guideStamp Duty Rates 2026/27: What Changed in April
The first-time buyer threshold dropped back to £300,000. Here's who is affected.
Read guideBuy-to-Let Investment Analysis Kit
Comprehensive spreadsheet model for analysing BTL investments: cash flow projections, ROI, tax impact, limited company comparison, and portfolio analysis.
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Official Rates Used
This calculator uses official HMRC rates for 2026/27. View the current rates at GOV.UK:
Rates last verified:
Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.