Buy-to-let stress test calculator
On a buy-to-let, it isn't your income that caps the loan — it's the rent. Lenders test that the rent covers the interest by a set margin, at a stressed rate. This works out the maximum loan your rent will actually support.
How is the maximum loan worked out?
The lender takes your expected annual rent and divides it by the interest coverage ratio multiplied by a stressed interest rate. The result is the largest loan the rent can service under the test. If that figure is lower than your loan-to-value ceiling allows, the rent — not your deposit — is what's limiting you.
This is why two identical borrowers can be offered very different amounts on two different properties: it's the property's rental valuation doing the work. The full mechanics are in the BTL stress test explained.
Why buy-to-let is often easier for contractors
Because the assessment is driven by rent rather than your day rate, the income-reading problem that dogs residential applications matters far less. Most lenders still want a minimum personal income, so it helps to be with a lender that reads your contract income properly — but it's a threshold to clear, not a multiplier that sets your loan. See buy-to-let for contractors.
If the test caps you too low
You have three levers: a larger deposit (reducing the loan the rent must cover), a property with a higher rental valuation, or a lender with a more generous ratio or stress rate — some apply a lower stress rate to five-year fixed products, and limited company products often use a gentler ratio. Which lever is available to you is exactly what a whole-of-market search establishes.
The stress test, explained
What does the buy-to-let stress test calculate?+
It works out the maximum loan the rent will support. Lenders check that the expected rent covers the mortgage interest by a set margin — the interest coverage ratio — tested at a stressed interest rate higher than the one you'd actually pay. If the rent doesn't clear that bar, the lender simply lends less.
What interest coverage ratio should I use?+
It depends on your tax position and the lender. A commonly applied figure is 125% for limited company and basic-rate borrowers, and 145% for higher-rate taxpayers, though lenders set their own. Some apply a lower stress rate to five-year fixed products, which can increase the loan available.
Why does my loan depend on rent rather than my income?+
Because a buy-to-let is assessed primarily on the property's ability to service the debt. Most lenders still want a minimum personal income, but it's a threshold to clear rather than a multiplier — which is why buy-to-let is often easier for contractors than a residential mortgage.
What if the stress test caps me below what I need?+
Your options are a larger deposit, a property with a higher rental valuation, or a lender with a more generous coverage ratio or stress rate. More deposit is usually the practical lever, since it reduces the loan the rent has to cover.