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The honest answer surprises people: how much you can borrow on a buy to let has almost nothing to do with your salary. The rent decides. Lenders work backwards from the rent the property can earn, test it against a notional interest rate with a safety margin, and that produces your maximum loan.
The calculation lenders actually use
Take the annual rent, divide it by the lender’s stress rate multiplied by the required rent cover, and you have the ceiling. Worked example on typical test figures (a 5.5% stress rate, the same one used in my stress test guide): £1,000 a month is £12,000 a year. Personally, at 145% cover, that is £12,000 divided by 0.07975, roughly £150,000. Through a limited company at 125% cover, £12,000 divided by 0.06875, roughly £174,500. Same property, same rent, quite different ceilings. These are illustrations, not quotes; every lender’s exact figures differ.
Why your salary does not set the number
The loan is secured on a property that pays for itself through rent, so lenders test the rent, not your payslip. Your income still matters at the edges, minimum income rules and whether you need one at all vary by lender, but it does not size the loan.
Buy to let borrowing is set by the rent, not your salary
The test: annual rent divided by the lender’s stress rate times the cover ratio
On typical test figures, £1,000 a month of rent supports roughly £150,000 personally, about £174,500 through a company
The 75% loan to value cap applies as well, and whichever number is lower wins
Top slicing can lift the answer if you have surplus personal income
What changes the answer
Four things move the ceiling. Your tax band: higher-rate taxpayers usually face the 145% cover test, basic-rate borrowers often 125%. The ownership structure: company lending is normally tested at 125%, which is most of why the company figure above is bigger. The product: some lenders apply different stress rates to different products, particularly longer fixes. And the property: anything unusual, from an HMO to a flat above a shop, can carry its own rules.
Try your own numbers
My maximum mortgage calculator turns a rent figure into an indicative loan, and the rent calculator runs it the other way, telling you the rent a target loan needs. Two minutes with both tells you whether a property is worth pursuing.
The deposit cap still applies
The rent test is one ceiling; loan to value is the other. Buy to let normally tops out at 75% of the property’s value, so your borrowing is the LOWER of the rent-supported figure and 75% of the price. A high-yield property can pass the rent test easily and still be capped by your deposit.
When the rent falls short: top slicing
If the rent supports slightly less than you need, some lenders let surplus personal income bridge the gap. That is top slicing, and it is the main route by which a strong salary changes a buy to let outcome.
Speak to an expert
Want your real buy to let borrowing number? Call me on 01425 203055 or email info@htgmortgages.com. I will run the numbers before you offer.
What this means when you are property hunting
Work the sums before you offer. In lower-yield areas, and much of my patch qualifies, the rent test bites before the deposit does, which is why the same budget buys more borrowing power in Portsmouth than in Winchester. My Hampshire buy to let page has the local yield numbers behind that.
One caution on the rent figure
Lenders do not take your word for the rent: the valuer confirms a market rent, and that figure drives the test. Base your sums on comparable local lettings, not on the most optimistic listing you can find, or the valuation will do it for you.
Get the real number before you offer
Tell me the property, the realistic rent and how you plan to own it, and I will tell you what lenders will genuinely advance. Book a call, phone 01425 203055, or WhatsApp 07731 675537.
Need Personal Mortgage Advice?
Every buyer’s situation is different. While this guide explains the general rules, the right mortgage for you depends on your income, deposit, credit history and future plans. If you’d like tailored advice, I’m here to help, with whole-of-market coverage.
