Lenders do not lend against the rent you collect; they lend against the rent divided by a stressed rate and a cover ratio. This is that arithmetic, so you know your ceiling before you offer on anything.
Illustrative only. Individual lenders vary their stress rates, cover ratios and LTV caps by product, property type and borrower; holiday lets are assessed differently again. Not an offer of finance.
Stress-test my real dealThe most expensive mistake in investment lending is offering on a property at a loan the rent cannot support. The headline rate that attracted you dies at underwriting, the retention runs out, and the deal collapses late. We run this arithmetic on every BTL case before approaching any lender, so you know before you offer whether the rent supports the loan.
How we arrange BTL and portfolio finance, including limited company structures, HMOs and Scottish holiday lets with their licensing wrinkles. Letting by the room? Our page on HMO finance in Scotland covers licensing and how lenders value them. Buying something that needs work first? The bridge to let calculator runs the bridge, the works and the refinance in one go.
Because rental cover binds first on most deals. Lenders cap the loan at whichever is lower: the LTV ceiling or the amount the stressed rent arithmetic supports. Strong rents relative to value lift the cover cap towards the LTV cap.
Typically 125% for limited companies and basic-rate taxpayers, 145% for higher-rate personal borrowers. It is one of the strongest arguments in the company-vs-personal-name decision, alongside the tax treatment.
Commonly the higher of 5.5% or the pay rate plus a margin, with easier tests on some five-year fixes. The default here is a sensible middle; we will run your case against real lender criteria before anything is submitted.
The property, price, expected rent and structure. We'll send back the stressed maximum borrowing with an honest view, one working day.