--- title: "Buy To Let Interest Only Calculator — UK ICR Stress Test | First Rung Now" description: "Free UK buy to let interest only calculator. Work out monthly interest, surplus rent, ICR coverage and maximum loan size at any stress rate." lang: en-GB json-ld: | [ { "@context": "https://schema.org", "@type": "Organization", "name": "First Rung Now", "url": "https://firstrungnow.com", "logo": { "@type": "ImageObject", "url": "https://firstrungnow.com/logo-512.png", "width": 512, "height": 512 }, "description": "Independent UK mortgage education and broker matching service.", "address": { "@type": "PostalAddress", "addressCountry": "GB" } }, { "@context": "https://schema.org", "@type": "WebSite", "name": "First Rung Now", "url": "https://firstrungnow.com" }, { "@context": "https://schema.org", "@type": "Article", "headline": "Buy To Let Interest Only Calculator", "description": "Free UK buy to let interest only calculator. Work out monthly interest, surplus rent, ICR coverage and maximum loan size at any stress rate.", "author": { "@type": "Organization", "name": "First Rung Now" }, "publisher": { "@type": "Organization", "name": "First Rung Now", "url": "https://firstrungnow.com" }, "mainEntityOfPage": "https://firstrungnow.com/buy-to-let-interest-only-calculator", "datePublished": "2026-06-15", "dateModified": "2026-06-15", "inLanguage": "en-GB" }, { "@context": "https://schema.org", "@type": "BreadcrumbList", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://firstrungnow.com/" }, { "@type": "ListItem", "position": 2, "name": "Mortgage Calculators", "item": "https://firstrungnow.com/mortgage-calculators" }, { "@type": "ListItem", "position": 3, "name": "BTL Interest Only Calculator", "item": "https://firstrungnow.com/buy-to-let-interest-only-calculator" } ] }, { "@context": "https://schema.org", "@type": "FAQPage", "mainEntity": [ { "@type": "Question", "name": "What is a buy to let interest only mortgage?", "acceptedAnswer": { "@type": "Answer", "text": "A BTL mortgage where you pay only the interest each month and the capital is repaid in full at the end of the term — usually from sale of the property or refinance. The vast majority of UK BTL mortgages are interest-only." } }, { "@type": "Question", "name": "How much can I borrow on a BTL interest only mortgage?", "acceptedAnswer": { "@type": "Answer", "text": "The maximum loan is set by rental coverage (ICR), typically 125% (basic-rate taxpayer) or 145% (higher-rate / limited company) of monthly interest at a stressed rate of 5.5–7%." } }, { "@type": "Question", "name": "What's the ICR stress rate for BTL in 2026?", "acceptedAnswer": { "@type": "Answer", "text": "Most lenders use 5.5% for 5-year fixes, 7% for 2-year fixes and trackers. Specialist lenders go as low as 4.5% on 5-year products for limited companies." } }, { "@type": "Question", "name": "What is top-slicing in BTL?", "acceptedAnswer": { "@type": "Answer", "text": "Top-slicing allows lenders to supplement rental income with the landlord's personal income when the rent alone doesn't meet ICR. Not all lenders offer it — it's most common with specialist and private bank lenders." } }, { "@type": "Question", "name": "What are portfolio landlord rules?", "acceptedAnswer": { "@type": "Answer", "text": "Since the PRA's 2017 changes, landlords with four or more mortgaged properties are classed as portfolio landlords. Lenders must stress-test the entire portfolio, not just the new property, before lending." } }, { "@type": "Question", "name": "Can I do part interest-only, part repayment on a BTL?", "acceptedAnswer": { "@type": "Answer", "text": "Yes, some lenders allow part-and-part BTLs but the calculator below assumes pure interest only — by far the dominant structure." } }, { "@type": "Question", "name": "Is it better to hold BTL in a limited company?", "acceptedAnswer": { "@type": "Answer", "text": "For higher-rate taxpayers it often is, because Section 24 restricts personal-name mortgage interest relief but a limited company can deduct all finance costs as a business expense. However, extraction costs and accountancy fees must be weighed against the tax saving." } } ] } ] --- [Skip to content](#main) [London 020 8088 2997 ](tel:02080882997)[National 0333 567 1185 ](tel:03335671185) [![First Rung Now](/assets/logo-mark-CNo3p3DP.png) First Rung Now UK Mortgage Guides ](/) - Mortgages - Remortgages - Buy To Let - Bad Credit - Calculators - Guides - [Find a Broker](/find-a-mortgage-broker) - [About](/about) [London 020 8088 2997 ](tel:02080882997)[National 0333 567 1185 ](tel:03335671185) [Speak to a Vetted Broker](/find-a-mortgage-broker) 1. [Home](/) 2. [Mortgage Calculators](/mortgage-calculators) 3. BTL Interest Only Calculator UK Mortgage Guide # Buy To Let Interest Only Calculator (UK) UK buy to let lending revolves around one calculation: does the rent cover the mortgage interest at the lender's stressed rate, by a multiple known as the Interest Coverage Ratio (ICR). This calculator does the maths instantly — monthly interest cost, surplus rent, ICR coverage and maximum loan size. First Rung Now Editorial Updated 15 June 2026 7 min read On this page 1. [Key takeaways](#key-takeaways) 2. [BTL Interest Only Calculator](#btl-interest-only-calculator) 3. [How BTL interest only works](#how-btl-interest-only-works) 4. [The ICR and stress rate framework in detail](#the-icr-and-stress-rate-framework-in-detail) 5. [Top-slicing: when rent alone isn't enough](#top-slicing-when-rent-alone-isnt-enough) 6. [Portfolio landlord rules: the PRA framework](#portfolio-landlord-rules-the-pra-framework) 7. [Section 24 and the personal versus limited company decision](#section-24-and-the-personal-versus-limited-company-decision) 8. [Speak with a vetted mortgage broker about buy to let interest only mortgages](#speak-with-a-vetted-mortgage-broker-about-buy-to-let-interest-only-mortgages) 9. [Frequently asked questions](#frequently-asked-questions) 10. [What is a buy to let interest only mortgage?](#what-is-a-buy-to-let-interest-only-mortgage) 11. [How much can I borrow on a BTL interest only mortgage?](#how-much-can-i-borrow-on-a-btl-interest-only-mortgage) 12. [What's the ICR stress rate for BTL in 2026?](#whats-the-icr-stress-rate-for-btl-in-2026) 13. [What is top-slicing in BTL?](#what-is-top-slicing-in-btl) 14. [What are portfolio landlord rules?](#what-are-portfolio-landlord-rules) 15. [Can I do part interest-only, part repayment on a BTL?](#can-i-do-part-interest-only-part-repayment-on-a-btl) 16. [Is it better to hold BTL in a limited company?](#is-it-better-to-hold-btl-in-a-limited-company) 17. [Related guides](#related-guides) 18. [Buy To Let Hub](#buy-to-let-hub) 19. [All Mortgage Calculators](#all-mortgage-calculators) 20. [Best HMO Mortgage Lenders](#best-hmo-mortgage-lenders) ### Calculators — related reads Interactive tools for borrowers and landlords. - [HMO mortgage calculator Size your HMO loan using room rents, ICR and stressed interest rates. ](/hmo-mortgage-calculator) - [RIO mortgage calculator Estimate maximum RIO loan and lifetime interest using property value, LTV and rate. ](/retirement-interest-only-mortgage-calculator) - [JBSP mortgage calculator Combined-income affordability when a parent supports the mortgage but stays off the title. ](/jbsp-mortgage-calculator) - [Mortgage buyout calculator Work out equity split, affordability and SDLT on a divorce or separation buyout. ](/mortgage-buyout-calculator-uk) - [Ltd company mortgage calculator ICR-driven max SPV BTL loan with worked 2026 examples. ](/ltd-company-mortgage-calculator) Explore the hubs [Mortgages explained](/mortgages)[Remortgages](/remortgages)[Buy-to-let mortgages](/buy-to-let)[Bad credit mortgages](/bad-credit-mortgages)[Mortgage calculators](/mortgage-calculators)[All mortgage guides](/mortgage-guides)[Find a mortgage broker](/find-a-mortgage-broker) ## Key takeaways - BTL mortgages are usually interest-only — capital repaid at end of term. - Maximum loan set by ICR: rent must cover interest at a stress rate by 125–145%. - Stress rates: 5.5% on 5-year fixes; 7% on 2-year/trackers. - Portfolio landlords (4+ properties) face a whole-portfolio stress test under PRA rules. - Section 24 restricts interest relief in personal name — limited companies pay corporation tax instead. ### BTL Interest Only Calculator Property value (£) LTV (%) Pay rate (%) Monthly rent (£) Stress rate (%) ICR (%) Loan amount £165,000 Monthly interest £755 Monthly surplus £545 Rent required (ICR) £1,396 Max loan by ICR £153,695 Gross yield 7.09% ## How BTL interest only works Want a vetted broker to help with How BTL interest only works? Free FCA-regulated introduction. We carefully check the broker matches your scenario — no pressure, no upfront fees. [Match me with a broker](/find-a-mortgage-broker) On an interest-only buy to let mortgage, you pay only the monthly interest charge for the entire term. The capital balance never reduces — whether you're in year one or year twenty-four of a 25-year term, the outstanding loan remains exactly the same. At the end of the term, the full original loan is repaid in a single transaction, typically from the sale of the property, refinance proceeds, or accumulated savings held separately. For a £165,000 loan at 5.49% interest only, the monthly payment is £755 — and it stays at £755 (on a fixed rate) regardless of how long you hold. Put the same loan on a 25-year repayment basis and you're paying £1,010 a month, steadily reducing the balance until nothing remains. The interest-only structure keeps payments low, which matters enormously in the ICR calculation that determines your maximum borrowing. ## The ICR and stress rate framework in detail Calculators · keep reading - [HMO mortgage calculator Size your HMO loan using room rents, ICR and stressed interest rates. ](/hmo-mortgage-calculator) - [RIO mortgage calculator Estimate maximum RIO loan and lifetime interest using property value, LTV and rate. ](/retirement-interest-only-mortgage-calculator) Browse the full hub: [Mortgage calculators](/mortgage-calculators) Want a vetted broker to help with The ICR and stress rate framework in detail? Free FCA-regulated introduction. We carefully check the broker matches your scenario — no pressure, no upfront fees. [Match me with a broker](/find-a-mortgage-broker) The Interest Coverage Ratio test is the single most important number in BTL lending. In plain English: the monthly rent must exceed the monthly mortgage interest payment by a meaningful margin, calculated not at the rate you'll actually pay but at a notional stressed rate designed to simulate what happens if rates rise sharply. The logic is straightforward — if a landlord is only marginally solvent at a 5% rate, they're in trouble the moment rates move to 6 or 7%. The stressed rate and ICR multiple that a lender applies depends on two variables: the fix period of the product and the tax status of the borrower. The standard framework most lenders work to looks like this: - **Basic-rate taxpayer, 5-year fix or longer:** stress rate 5.5%, ICR 125% - **Higher-rate or additional-rate taxpayer, 5-year fix:** stress rate 5.5%, ICR 145% - **Limited company SPV, 5-year fix:** stress rate 5.5%, ICR 125% (some lenders use 130%) - **Any 2-year fix or variable/tracker product:** stress rate 7–8%, regardless of borrower type The elevated ICR for higher-rate personal taxpayers exists because those borrowers face a harsher tax burden on rental profits — Section 24 restricts the mortgage interest deduction — so lenders assume a larger buffer is needed to absorb that cost. The fact that limited company borrowers often get the same 125% as basic-rate personal borrowers is a significant advantage for SPV landlords, and it's one of the key drivers of the limited company migration. Some specialist lenders go further, offering reduced stress rates on longer fixes. A small number will underwrite at 4.5–5% on 5-year SPV products, particularly for experienced portfolio landlords with strong track records. These products rarely appear on comparison sites and are typically placed through active BTL brokers who know the specialist lender panel. ## Top-slicing: when rent alone isn't enough Want a vetted broker to help with Top-slicing: when rent alone isn't enough? Free FCA-regulated introduction. We carefully check the broker matches your scenario — no pressure, no upfront fees. [Match me with a broker](/find-a-mortgage-broker) Top-slicing is a lending technique that allows a lender to supplement the rental income with the landlord's personal earned income or pension income when the rent alone falls short of the ICR threshold. If you have a property yielding £1,100/month but the ICR test requires £1,250, a lender offering top-slicing can bridge that £150 shortfall from your employment salary or other verified income. Not all lenders offer top-slicing — many mainstream BTL providers assess rental coverage in isolation and will decline if the property doesn't stack on its own numbers. Lenders that do offer top-slicing include Precise Mortgages, Fleet Mortgages, The Mortgage Works (for certain products) and several private bank lenders. The personal income needed to top-slice varies; most lenders want the surplus income to demonstrably cover the shortfall with headroom. Top-slicing is particularly useful in high-value, lower-yielding markets — central London, for instance, where capital values are high but rental yields can be modest at 4–5%. A property valued at £600,000 generating £2,500/month is a solid investment but a nightmare for pure ICR maths at 75% LTV. Top-slicing lets a well-salaried professional landlord make the deal work on paper without reducing the loan size. ## Portfolio landlord rules: the PRA framework Calculators · keep reading - [JBSP mortgage calculator Combined-income affordability when a parent supports the mortgage but stays off the title. ](/jbsp-mortgage-calculator) - [Mortgage buyout calculator Work out equity split, affordability and SDLT on a divorce or separation buyout. ](/mortgage-buyout-calculator-uk) Browse the full hub: [Mortgage calculators](/mortgage-calculators) Want a vetted broker to help with Portfolio landlord rules: the PRA framework? Free FCA-regulated introduction. We carefully check the broker matches your scenario — no pressure, no upfront fees. [Match me with a broker](/find-a-mortgage-broker) The Prudential Regulation Authority introduced its portfolio landlord underwriting standards in September 2017, creating a formal two-tier BTL lending market. A portfolio landlord is anyone with four or more mortgaged buy to let properties at the point of application — either across a single lender or spread across multiple lenders. The threshold counts mortgaged properties, not owned properties: four properties owned outright do not trigger portfolio rules. Once you hit the threshold, the lender is required to conduct a holistic stress test across your entire portfolio, not just the individual property being financed. Every existing mortgaged BTL is modelled at the lender's stress rate, with the cumulative picture assessed for financial resilience. If one or more properties in the portfolio are failing ICR at stress rates — perhaps because they were bought on a tracker and rates have moved against them — the new application can be impacted even if the new property easily passes on its own numbers. Practically, this means portfolio landlords need to present a detailed asset and liability schedule — a spreadsheet listing every property, its value, outstanding mortgage, lender, rent, fix end date and current monthly payment. Most specialist BTL lenders have a standard template. Getting this documentation right before approaching lenders makes a material difference to how smoothly a portfolio application proceeds. Lenders who actively court portfolio landlords include Paragon, Foundation Home Loans, Precise Mortgages, Kensington and Fleet Mortgages. ## Section 24 and the personal versus limited company decision Want a vetted broker to help with Section 24 and the personal versus limited company decision? Free FCA-regulated introduction. We carefully check the broker matches your scenario — no pressure, no upfront fees. [Match me with a broker](/find-a-mortgage-broker) Section 24 of the Finance (No. 2) Act 2015 — sometimes called the Osborne landlord tax — changed the tax treatment of mortgage interest for personal-name landlords. Prior to 2017, you could deduct your full mortgage interest from rental income before calculating your tax bill. From April 2020, that deduction was replaced with a basic-rate tax credit worth 20% of mortgage interest. For a higher-rate taxpayer, the effective cost is substantial. Take a landlord with £20,000 rental profit and £12,000 mortgage interest: previously taxable income was £8,000. Under Section 24, it's £20,000, with a £2,400 credit — meaning a 40% taxpayer pays £8,000 minus £2,400 = £5,600 in tax instead of £3,200. A £2,400 annual tax increase per property, every year, adds up fast across a portfolio. A special purpose vehicle (SPV) limited company sidesteps Section 24 entirely. Companies deduct all finance costs — mortgage interest, arrangement fees, valuation fees — as legitimate business expenses before calculating corporation tax. Corporation tax rates in 2026 stand at 19% for profits below £50,000 and 25% above £250,000 (with marginal relief between). For a landlord with multiple properties and a meaningful profit margin, the annual tax saving from holding in a limited company can run to thousands of pounds per property. The counterargument — always raised, and always valid — is the extraction cost. Profits sitting in a company don't benefit you personally until they're extracted via salary or dividends, both of which carry their own tax treatment. There are also additional setup and ongoing accountancy costs, and remortgaging an existing personal portfolio into a company typically triggers stamp duty and capital gains tax on disposal. The decision is genuinely complex and depends on your personal income, size of portfolio, long-term intentions and exit strategy. It's not a decision to make based on a guide article alone — take proper tax advice from an accountant who specialises in landlord taxation. Your property may be repossessed if you do not keep up repayments on a mortgage. This guide is for general information only and does not constitute regulated financial or tax advice. We are not FCA authorised advisers. Speak to a qualified mortgage adviser and a chartered accountant before making any borrowing or structural decision. Vetted UK Broker Match ### Speak with a vetted mortgage broker about buy to let interest only mortgages Free, no-obligation introduction to an FCA-regulated adviser with experience in your specific scenario. We've done the due diligence so you don't have to. - FCA-regulated only - Typical reply in 1 working day - No upfront fees [Match me with a broker](/find-a-mortgage-broker) ## Frequently asked questions ### What is a buy to let interest only mortgage? ### How much can I borrow on a BTL interest only mortgage? ### What's the ICR stress rate for BTL in 2026? ### What is top-slicing in BTL? ### What are portfolio landlord rules? ### Can I do part interest-only, part repayment on a BTL? ### Is it better to hold BTL in a limited company? ## Related guides [ ### Buy To Let Hub SPV vs personal name, ICR, portfolio rules. Read guide ](/buy-to-let)[ ### All Mortgage Calculators Repayment, affordability, LTV and BTL tools. Read guide ](/mortgage-calculators)[ ### Best HMO Mortgage Lenders Who funds HMOs in the UK. Read guide ](/best-hmo-mortgage-lenders) First Rung Now Independent UK mortgage education and broker matching. 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