UK Buy To Let Mortgage Repayment & Interest Only Calculator

What is a UK buy-to-let mortgages calculator?

Please note that the buy to let mortgages calculator for landlords may not look right on a mobile device. You are recommended to view the tax calculators on a desktop/laptop.

Landlord have a choice of a mortgage with capital repayment or interest only. A capital repayment has the advantage that it decreased debt over time but interest only mortgages is better for the immediate term regarding cashflow.

We have created a free online UK buy-to-let mortgage interest only calculator for landlords. The purpose of this free mortgage calculator is to show property investors how much money they will pay each month to their mortgage lenders.

This calculator assumes that the mortgage product is interest only. You will need to review our website page, where we discuss UK buy-to-let mortgages in greater detail.

This is a neat free buy-to-let mortgage calculator to show how much money will be made from your property investment before and after the mortgage interest cost.

This free tool allows landlords to see how much mortgage interest will be and how much money will be left over after this deduction. Make sure you speak with a buy-to-let mortgage specialist.

UK Buy-to-let interest tax relief calculator

Please be aware that the buy-to-let mortgage tax relief calculator needs a little care when reviewing the numbers. The calculator will tell you the profit you will make from the property when taking off costs from the rental income.

Landlords will need to take the buy-to-let profit and then deduct tax based on your circumstances:

0% income tax on buy-to-let profits for zero profits or for people that have profits below £12,570 personal allowance plus the additional £1,000 profit allowance (under certain circumstances)

20% income tax on buy-to-let profits for basic rate taxpayers that have a total income that exceeds the personal allowance up to £50,270 (plus the £1,000 property profit allowance)

40% income tax on buy-to-let profits as a high rate taxpayer that has earnings above £50,270 but less than £125,140

45% income tax on buy-to-let property profits on earnings that exceed £125,140.

The buy-to-let mortgage tax relief calculator does not take tax into account. That said, all you need to do is work out the tax based on the profit (excluding interest costs).

For example:

– £1,000 rental income

– £500 Rental costs (ignore mortgage interest)

– £500 profits (excluding mortgage interest costs)

For a high-rate taxpayer, landlords would pay income tax on the profits as follows

– £500 profits (excluding mortgage interest costs)

– £200 tax (40% of £500 profits)

Landlords do get a reducer on the profits made. The relief on mortgage interest is 20% of the cost. In this instance, a landlord would get relief as follows.

– £500 profits (excluding mortgage interest costs)

– £200 income tax (40% of £500 profits)

– £100 tax relief (20% of £500)

– £100 net tax to pay.

The buy-to-let mortgage tax relief calculator is a manual process based on a complex scenario.

Ways to reduce interest costs and Section 24 limit

Buy-to-let properties are an excellent way for landlords to make money. The danger with higher interest rates and Section 24 is that the banks and HMRC are making money.

Landlords looking to purchase buy-to-lets with a mortgage need to consider interest costs and income tax rather than landlords.

Here are some ways that landlords can mitigate the impact of the buy-to-let mortgage interest cap caused by HMRC and higher tax rates:

– Consider buying properties inside of a limited company as 100% of the buy-to-let mortgage interest costs are deductible

– Put a greater amount of deposit down on a property. Many landlords that purchase buy-to-let property investments could pay between 5% and 8% interest costs. Whilst this is happening, they may also have money in savings accounts, providing 1% to 3% of interest income. Using your savings to make a greater deposit rather than paying a lender interest for the higher amount of a mortgage loan would be better.

– Purchase Furnished Holiday Lets (FHLs) as Section 24 mortgage interest relief cap does not affect these types of property

Mortgage interest costs are significant. Landlords ought to be aware of when the product term ends. This is because lenders will put the product onto a variable rate, which means the landlord pays a more significant amount of mortgage interest.

Reviewing your mortgage products with a broker will ensure you know when each product term ends. This allows you to shop around and find another product with lower interest rates than the variable rate enforced by the lender after the term.

Albeit many landlords prefer mortgage interest only loans they need to remember that the mortgage remains a liability until paid.