Firstly lenders will base in the first instance the amount they will lend on the market rental figure that is usually established by the lender employed surveyor. But there are a lot of other factors that are looked at also depending on the specific lender.

Some lenders have a minimum income requirement; this is commonly set at £25,000 per applicant and is mandatory no matter how many existing buy to let the client has. This is often proven by 3 payslips P60 and bank statements showing the salary credit going into the account for employed applicants and for self employed, they will usually require 2 or 3 years SA302’S and tax overviews.

Due to buy to lets being un-regulated mortgage lenders have to be careful with their criteria, 99% of lenders require you to own 1 other property at the time of making the application and after the application has completed, this is to try and stop applicants trying to buy a property that is outside their current income and affordability limit as a buy to let and then living in the property after completion. It is possible to remortgage your home property on a buy to let basis if you want to move to another property to live in, 99% of lenders will insist that you complete the new purchase simultaneously with the let to buy remortgage, this is also to stop applicants remortgaging home property beyond what their income will allow them to remortgage it under income and affordability limits.

There are a handful of specialist lenders that will base the entire application without any minimum income requirements  but will insist you are an experienced landlord with at least 6 months landlord experience , this will mean you would have to have a property in your name you own and have rented out for at least 6 months . The lender will still require proof of income if you have an income this is often proven by 3 payslips P60 and bank statements showing the salary credit going into the account for employed applicants and for self employed, they will usually require 2 or 3 years SA302’S and tax overviews. The good thing is even if you earn nothing or a very small amount the lender will look at your application based on rental income.

Rental income calculator is now mostly dependant on being a lower rate tax payer or higher rate tax payer in the UK, this mostly equates to 125% of market rental income for lower rate tax payers and 145% for higher rate tax payers.

How to work out what you can borrow using these 2 common rental ratios.

125% lower rate tax payer.

Currently being used is a reversionary rate of 5% by lenders that they base the calculation on, but you would need to check with the lender what rate they are using currently for this.

Lower rate tax payer

Firstly you would need to work out the mortgage you think you will need £300,000 purchase price  minus standard 25% deposit for buy to lets =£225,000 mortgage needed then you multiply this by 5%=£11250 then you need to divide this by 12 to give you a monthly amount =£937.50 then you times this by the current lenders lower rate tax payer ratio 125% for this example =£1171.88 this is what the market rent needs to be , if it’s the same or higher than this you are good to go for the required mortgage amount , if it is lower you will need to put more deposit towards the purchase price to be able to buy the property .

For higher rate tax payers

Firstly you would need to work out the mortgage you think you will need £300,000 purchase price  minus standard 25% deposit for buy to lets =£225,000 mortgage needed then you multiply this by 5%=£11250 then you need to divide this by 12 to give you a monthly amount =£937.50 then you times this by the current lenders lower rate tax payer ratio 145% for this example =£1359.38  this is what the market rent needs to be , if it’s the same or higher than this you are good to go for the required mortgage amount , if it is lower you will need to put more deposit towards the purchase price to be able to buy the property .

You can see if you are a higher rate tax payer, you would need more rental income from property than as a lower rate tax payer.