Buy-to-Let Mortgage Repayments

To get a idea of the overall cost of a buy-to-let mortgage, you will need to know how much your monthly payments will be. Here you will learn how they are calculated, what factors affect them, and how to work them out for yourself.

How are buy-to-let mortgage repayments calculated?

The monthly amount you will pay on a buy-to-let mortgage is calculated in exactly the same way as it would be for a residential mortgage. Each month, the amount you will pay will be determined by the interest rate, term length and the type of mortgage you opt for.

Although the underlying calculations are no different for this type of mortgage, buy-to-let repayments can be different than they are for residential mortgages of the same amount. This is partly because interest rates are generally higher for investment properties.

Another thing to bear in mind when crunching your numbers is that most buy-to-let mortgages are agreed on an interest-only basis, which means your repayments only need to cover the monthly interest, and will be lower than for a capital repayment mortgage.

What typical repayments look like

At the time of writing (December 2024), the average interest rate on a buy-to-let mortgage is between 4% and 5% and a typical term length would be 25 years. According to the latest data from Zoopla, the average cost of a buy-to-let property in the UK is around £262,000.

Based on this information, the average monthly payment on a buy-to-let mortgage would be around £983, if taken on an interest-only basis like most investment mortgages are.

Paying this amount for your mortgage would mean that you would be paying back £556,750 by the end of the term, although landlords can settle their capital debt by selling the property.

Calculate your buy-to-let mortgage repayments

You can use our buy-to-let mortgage repayment calculator below to work out how much your mortgage is likely to cost each month. This tool has been set up to be representative of buy-to-let mortgages, with a default interest rate of 4.5% and the repayment type set to interest-only, but these variables can be changed manually if you wish to make some comparisons.

Now that you have run some calculations, you can compare buy-to-let mortgage rates for free on Teito, or connect with a broker for guidance - get started here.

Example calculations

Here we have provided a range of example calculations for typical buy-to-let mortgage repayments based on loans of various amounts. These tables show how factors such as the interest rate and term length will affect the monthly/overall cost of your mortgage.

£100,000 buy-to-let mortgage repayments

The tables below show how the repayments on a £100k buy-to-let mortgage can vary based on different term lengths and rates. These calculations are for an interest-only mortgage.

The above calculations are for a BTL mortgage with a 25-year term

The above calculations are for a BTL mortgage with a 4.5% interest rate

£200,000 buy-to-let mortgage repayments

The tables below show how the repayments on a £200k buy-to-let mortgage can vary based on different term lengths and rates. These calculations are for an interest-only mortgage.

The above calculations are for a BTL mortgage with a 25-year term

The above calculations are for a BTL mortgage with a 4.5% interest rate

£300,000 buy-to-let mortgage repayments

The tables below show how the repayments on a £300k buy-to-let mortgage can vary based on different term lengths and rates. These calculations are for an interest-only mortgage.

The above calculations are for a BTL mortgage with a 25-year term

The above calculations are for a BTL mortgage with a 4.5% interest rate

£400,000 buy-to-let mortgage repayments

The tables below show how the repayments on a £400k buy-to-let mortgage can vary based on different term lengths and rates. These calculations are for an interest-only mortgage.

The above calculations are for a BTL mortgage with a 25-year term

The above calculations are for a BTL mortgage with a 4.5% interest rate

£500,000 buy-to-let mortgage repayments

The tables below show how the repayments on a £500k buy-to-let mortgage can vary based on different term lengths and rates. These calculations are for an interest-only mortgage.

The above calculations are for a BTL mortgage with a 25-year term

The above calculations are for a BTL mortgage with a 4.5% interest rate

Repayment buy-to-let mortgage calculations

The table below shows what the repayments will be for buy-to-let mortgages of various amounts taken out on a capital repayment basis, rather than interest-only. These calculations are based on a mortgage with a 4.5% interest rate and a 25-year term length.

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Tips to help landlords reduce their repayments

The following tips can help landlords potentially reduce their buy-to-let mortgage repayments:

• Put down a larger deposit: Not only would you need to borrow less, putting down extra deposit can reduce the loan-to-value (LTV) ratio and help you qualify for a lower rate.
• Improve your credit situation: Waiting for any bad credit to disappear from your credit files, paying off debts you’re in a position to clear, and paying any existing bills and credit agreements on time ahead of your application can also help you land a lower rate.
• Consider a longer mortgage term: This will reduce your monthly payments in the short term (on a capital repayment agreement), but you will be paying more in interest overall. 
• Consider a portfolio mortgage: If you own four or mortgage properties, a multi-property mortgage might end up more affordable than having individual mortgages for each. Be sure to seek professional advice before proceeding with this, though.

Other costs to factor in

The monthly payments on your buy-to-let mortgage aren’t the only cost you will need to consider. These mortgages come with additional fees, and they are typically higher for people who are buying investment properties compared to residential homebuyers.

• Product fees: Can range between nothing and 5-7% of the loan amount for a buy-to-let mortgage. Fee-free deals often come with higher interest rates, but the fee itself can sometimes be added to the mortgage, at the lender’s discretion.
• Valuation fee: Some lenders will expect you to foot the cost of having the property you’re buying valued, and this can set you back between £250-3,000. This cost is likely to be higher if you are buying a complex property type, such as an HMO.
• Legal fees: Can range from a few hundred to several thousand pounds. Landlords may be charged the higher amount if they are buying through a limited company.
• Stamp duty: You can find out exactly how much your bill will be for this tax in our guide to BTL stamp duty.
• Admin costs: This includes the booking fee, telegraphic transfer fee and the account fee. All in all, admin costs for a mortgage application can cost around £1,000.

What to do after running your calculations

Now that you have a better idea of the overall cost of your mortgage, you can compare the latest buy-to-let rates for free on Teito and we have brokers on hand if you need some help.

Here are just some of the reasons people choose us for their mortgage needs:

• You can access the latest BTL deals in seconds
• Our brokers specialise in investment mortgages
• We are 5-star rated on leading review services
• It takes minutes to secure an agreement in principle

Ready to compare rates for free and get independent advice from a broker who specialises in buy-to-let mortgages? Get started here.