The mortgage
An estimate of typical lender criteria. It is not a mortgage offer or financial advice.
Rates fixed for five years or more can be tested at or near the pay rate.
Buy-to-let lenders check that the rent covers the mortgage interest by a margin, at a rate higher than the one you will pay. This shows the rent a typical lender needs to see for your loan, and the largest loan your rent would support.
An estimate of typical lender criteria. It is not a mortgage offer or financial advice.
Rates fixed for five years or more can be tested at or near the pay rate.
Lenders regulated by the Prudential Regulation Authority follow its supervisory statement SS13/16 on buy-to-let underwriting, first published in 2016. It expects them to check that the rent covers the mortgage interest using an interest coverage ratio, or ICR. The ICR is the annual rent divided by the annual interest at the stress rate. At 125 percent, every £100 of stressed interest needs £125 of rent.
The PRA does not set the ICR itself. It notes that the industry standard minimum is 125 percent, and it expects lenders to allow for the borrower's tax, including the mortgage interest restriction. That is why many lenders ask higher and additional rate taxpayers for 145 percent, while limited company borrowers, who deduct interest in full, are commonly tested at 125 percent.
The stress rate is the interest rate the lender tests against. The PRA expects lenders to allow for likely rate rises over at least five years, including a rise of at least 2 percentage points, and to assume at least 5.5 percent. Those expectations do not apply where the rate is fixed for five years or more, so five-year fixes are often tested at the pay rate or close to it, which is why they can lend more on the same rent.
| Loan | 125 percent at 5.5 percent | 145 percent at 5.5 percent | 125 percent at 4.5 percent (five-year fix) |
|---|---|---|---|
| £100,000 | £573 a month | £665 a month | £469 a month |
| £150,000 | £859 a month | £997 a month | £703 a month |
| £200,000 | £1,146 a month | £1,329 a month | £938 a month |
| £250,000 | £1,432 a month | £1,661 a month | £1,172 a month |
Rent needed to pass the interest cover test on an interest-only basis. Lenders also apply loan to value limits, minimum rents, property and borrower checks, and may use your other income to top up a shortfall.
This page is general information for England. It is not a mortgage offer, a decision in principle or financial advice, and individual lenders' criteria vary. A mortgage broker can tell you which lenders' criteria fit your figures.
It is the annual rent divided by the annual mortgage interest at the lender's stress rate. The PRA describes 125 percent as the industry standard minimum; many lenders ask higher rate taxpayers for 145 percent.
For products fixed for under five years, the PRA expects lenders to assume a rise of at least 2 percentage points and at least 5.5 percent. For rates fixed for five years or more, lenders can test at or near the pay rate.
At 125 percent cover and a 5.5 percent stress rate, about £1,146 a month. At 145 percent it is about £1,329 a month. On a five-year fix tested at 4.5 percent and 125 percent, about £938 a month.
A company deducts mortgage interest in full before corporation tax, so the Section 24 restriction does not apply. Lenders therefore commonly test company borrowers at 125 percent whatever the directors' personal tax rate.
Some lenders allow top slicing, where your personal income covers part of the shortfall, which SS13/16 allows as an income affordability test. Others will lend less instead. A larger deposit or a five-year fix are the usual ways to pass.
Prudential Regulation Authority, SS13/16 Underwriting standards for buy-to-let mortgage contracts (first published September 2016, updated September 2024 and January 2026), read 3 October 2026. The 145 percent and company 125 percent figures are common lender practice, not PRA rules.