Let to Buy Calculator United Kingdom

Let to buy means keeping the home you live in, renting it out and buying a new home to move into. This calculator shows the net monthly cost: it takes the rent you expect on your current home, subtracts the interest on the buy-to-let mortgage that replaces your residential deal, and sets the surplus against the repayment mortgage on your new home.

How let to buy works

You run two mortgages at once. Your current home is remortgaged onto a buy-to-let product, almost always interest-only, so its monthly cost is the interest on the balance. The rent covers that interest and ideally leaves something over. You take a new residential mortgage, normally a repayment deal, on the home you move into. People do this to keep a property they expect to rise in value, or one they cannot sell quickly, while still moving.

The rental surplus

The rental surplus is the rent on your current home minus the monthly interest on its buy-to-let mortgage. Because the mortgage is interest-only, the balance is not being paid down, so the surplus is the cash the let produces each month before other costs. A large surplus can cut what your new home costs you; a small or negative one makes the let a drain on your budget.

The new home payment

The calculator takes the purchase price, subtracts your deposit to find the amount borrowed, and works out the repayment mortgage over your chosen term at the rate you enter. Each payment covers interest and some of the loan, which is cleared by the end of the term. A longer term lowers the monthly payment but increases the total interest; the term is in the advanced options.

Reading the net monthly cost

The main result is the new home payment minus the rental surplus: what your new home actually costs each month once the tenants have paid and the old mortgage interest is covered. With a healthy surplus the net cost can be well below the new payment; with a large old mortgage or modest rent it approaches the full new payment.

A worked example

Your current home has a £120,000 mortgage switched to an interest-only buy-to-let at 5.5%, so the monthly interest is £550. It rents for £1,000 a month, leaving a £450 surplus. You buy a new home for £350,000 with a £70,000 deposit, borrowing £280,000 over 25 years at 5%, which costs about £1,636.85 a month. Subtracting the £450 surplus leaves a net monthly cost of about £1,186.85.

Assumptions and limitations

This is a cash flow estimate, not a full financial model. It assumes the current mortgage is interest-only and that rent arrives in full every month, with no voids, letting agent fees, maintenance or insurance. It does not include the 5% higher rate stamp duty surcharge that usually applies when you buy while still owning another home, Income Tax on rental profit, the landlord’s mortgage interest tax credit, Capital Gains Tax when you eventually sell the old home, or product and arrangement fees. Get real quotes from lenders and a realistic rent from a letting agent, and speak to a mortgage broker and an accountant before committing.

About This Let to Buy Calculator

Use this let to buy calculator to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.