Enter your investment numbers to see your buy-to-let profit results here.
This section provides details on all of the information collected, presented and calculated in the buy to let profit calculator on this page.
Read this section if you have any questions about what the information above actually means or if you'd like to fully understand the calculations that are being performed and would like to be able to use them elsewhere.
The total amount of cash that would need to be invested in the project. Including stamp duty (SDLT), deposit, initial repair costs and fees.
If you've entered a value for "Cash Available", the total investment figure will be the amount you entered; unless you have more cash available than is required to complete the investment without a mortgage.
Without a "Cash Available" amount, the formula used for this is:
(stamp duty) + (deposit) + (repair costs) + (legal fees) + (mortgage fees)
The calculated stamp duty (SDLT) for the property purchase price. This assumes a residential property and includes the additional property increase (an extra 3%). You can verify the amount using the online Government stamp duty calculator. SDLT is a complex tax with many adjustments for certain situations which are not covered by this calculator (or the Government one). There is an SDLT manual available with all the details though.
You can find detailed formulas for calculating stamp duty on our blog, complete with downloadable Excel spreadsheet.
The deposit amount. This will either be the minimum possible, if you haven't entered a "Cash Available" amount, or the maximum your cash will allow given other investment costs such as stamp duty.
With "Cash Available" specified, the formula for this is:
the minimum of (cash available) - (legal fees) - (mortgage fees) - (repair cost) - (stamp duty) and (purchase price)
Without "Cash Available" being set, the formula is instead:
(purchase price) - (mortgage)
...see below for the mortgage calculation.
Value of the mortgage you'll need to use for this property investment (or what you can afford, if you've included set a "Cash Available" value). The corresponding loan to value amount is shown in brackets.
When you've included "Cash Available", the forumula for the mortgage is just:
(purchase price) - (deposit)
However when calculating the minimum investment required the process is more complicated. First we calculate the maximum mortgages permitted by LTV and rental cover limitations.
Max mortgage based on LTV formula: (purchase price) * (max LTV / 100))
Max mortgage based on rental cover formula: (monthly rent) * 12 / ( (stress rate) / 100) / ( (required rental cover) / 100)
Final max mortgage available: the minimum of the above two calculations.
Calculated monthly mortgage interest, using the calculated mortgage borrowing shown and the interest rate that you entered.
Calculation formula: (mortgage) * ( (mortgage rate) / 100 ) / 12
An estimate of monthly expenses, calculated as 15% of the rental income. This is intended to be an approximation of what might be needed to cover maintenance, voids, insurance and other running costs. It probably isn't high enough to cover full management by an agent or higher cost leasehold service charges. For the ability to specify custom investment expenses you can use PaTMa Prospector.
Calculation formula: (monthly rent) * 0.15
Calculated as the monthly rent minus monthly mortgage interest and monthly expenses. This value does not allow for the cost of tax.
Calculation formula: (monthly rent) - (monthly mortgage interest) - (monthly expenses)
Return On Investment, calculated as your rent minus mortgage and running expenses divided by the amount of cash invested you can find more details on ROI calculation here.
Calculation formula: (annual profit) / (total investment) * 100
Gross yield, calculated as annual rental income divided by the pruchase price, you can find more details on yield calculation here.
Calculation formula: (annual rent) / (purchase price) * 100