Buy-to-Let Remortgage Calculator and Lender Stress Tests

The ICR Formula

ICR = (monthly rent × 12) / (loan amount × stress rate). For a mortgage to pass, ICR must meet or exceed the lender's minimum, typically 125% for basic-rate taxpayers and 145% for higher-rate or limited company. Stress rates vary by product type: 5-year fixed products use lower stress (often pay rate + 1%); 2-year fixed use higher stress (typically 5.5% or product + 2%).

Example: £1,500 monthly rent on a £200,000 loan. At 145% ICR requirement and 5.5% stress rate, required rent = £200,000 × 5.5% × 145% / 12 = £1,329. Actual rent £1,500 exceeds requirement, so loan passes. If rent were £1,300, the maximum loan would be £1,300 × 12 / (5.5% × 145%) = £195,614.

Lender	ICR basic rate	ICR higher rate / ltd co	Stress 2-yr fix	Stress 5-yr fix
The Mortgage Works	125%	145%	6.50%	pay rate + 1%
BM Solutions	125%	145%	5.50%	pay rate + 0.5%
Paragon	125%	140%	6.00%	pay rate + 1%
Aldermore	125%	145%	5.50%	pay rate + 1%
Fleet	125%	140%	5.50%	pay rate

Why 5-Year Fixes Unlock More BTL Borrowing

PRA rules set in 2017 allow lenders to use pay rate (or pay rate + 1%) as the stress rate on 5-year fixed BTL products, compared to stress rates of 5.5% or higher on 2-year fixes. This is a regulatory carve-out designed to encourage longer-term fixed lending. The practical effect: a 5-year fix at 4.80% stresses at 4.80% + 1% = 5.80%, only 0.30% above a 2-year fix's 5.50% stress, and often lower.

On a £1,500 rent and 145% ICR, max loan at 5.50% stress = £225,710. Max loan at 4.80% stress (5-year pay rate) = £258,619. The 5-year fix allows 14% more borrowing on the same rent.

This is the main reason most BTL remortgages in 2026 are 5-year fixed, even when 2-year rates are nominally cheaper. Landlords optimise for borrowing capacity rather than minimum interest cost. Run both calculations and choose based on whether borrowing capacity or rate is your binding constraint.

Worked Example 1: Single Property Remortgage

Sarah owns a £260,000 BTL with £180,000 balance, 69.2% LTV, currently on 4.55% 5-year fix. She is higher-rate taxpayer, so 145% ICR applies. Rent £1,350/month. End of fix April 2026.

New 5-year fix at 4.82% with The Mortgage Works (pay rate +1% stress = 5.82%). Required rent at 145% ICR = £180,000 × 5.82% × 145% / 12 = £1,266. Sarah's rent £1,350 exceeds, passes comfortably. Maximum loan at her rent: £1,350 × 12 / (5.82% × 145%) = £192,082. She could borrow up to £12,082 more if desired.

Two-year fix alternative at 4.45% stresses at 5.50%. Required rent: £180,000 × 5.50% × 145% / 12 = £1,196. Also passes. Max loan: £202,727. The 2-year fix allows £10,645 more borrowing but at higher near-term refinance risk. If Sarah wants to release equity for another purchase, 2-year gives more capacity; if she just wants to fix costs, 5-year is more stable.

Worked Example 2: Top-Slicing with Personal Income

Top-slicing is a practice where a BTL lender allows personal income to compensate for a rental shortfall. Available at a minority of lenders (Paragon, Fleet, Landbay) on certain products. It does not replace the ICR test but allows an ICR failure to be cured by demonstrating personal income exceeds a threshold (typically £50,000 to £75,000).

James has a £220,000 BTL with £160,000 balance, rent £1,050/month. At 145% ICR and 5.82% stress, required rent = £1,124. James fails by £74/month. However, his personal salary is £95,000, which comfortably exceeds Paragon's £60,000 threshold for top-slicing. The shortfall can be covered by personal income evidence.

Top-slicing is not available on all products or all LTVs. It is almost never available above 70% LTV. The FCA generally discourages the practice because it obscures the rental viability of the underlying property. If you rely on top-slicing, your remortgage options will be narrower in future, and the property itself is marginally loss-making if it cannot service the mortgage from rent alone.

Worked Example 3: Portfolio Landlord Rules

Since October 2017, the PRA has required special treatment for portfolio landlords (4 or more mortgaged BTLs). The lender must assess the applicant's entire portfolio for overall gearing and cash flow, not just the subject property. A single loss-making property in an otherwise solvent portfolio can still be refinanced if the aggregate position holds up.

Mohammed has 6 BTL properties totalling £1.4m value, £980,000 total debt. He is remortgaging one property. Aggregate ICR is calculated across all 6 using all rental income and all stressed interest payments. Required aggregate ICR 145% at 5.82% stress: £980,000 × 5.82% × 145% / 12 = £6,889 monthly rent. Actual aggregate rent £7,350/month. Aggregate ICR 155%, passes.

Portfolio applications require: schedule of all properties, rent roll, individual mortgages details, profit/loss summaries. Lenders specialising in portfolio landlords include Paragon, The Mortgage Works, Precise, Fleet, Landbay. Non-portfolio (1-3 properties) borrowers do not face this scrutiny.

Section 24 and the Limited Company Question

Since April 2020, individual landlords can deduct mortgage interest only as a basic-rate tax credit, not from taxable profits. For a higher-rate taxpayer landlord, this effectively raises the cost of mortgage interest by about 20%. Limited company landlords continue to deduct interest fully from company profits, at corporation tax rates (19% to 25%).

Practical example: rent £15,000/year, mortgage interest £9,000/year, other costs £3,000/year. Individual higher-rate: taxable as £12,000 net, tax at 40% = £4,800, minus basic-rate credit on £9,000 interest = £1,800. Net tax £3,000. After-tax cash flow = £3,000. Limited company: taxable £3,000, corporation tax 19% = £570. After-tax cash flow = £2,430 in company (before extracting as dividend).

The comparison is more nuanced when you add extraction tax (dividend tax on money taken out of the company). For landlords with intention to retain rents for reinvestment, limited company is usually more tax-efficient. For landlords intending to extract all rents to live on, individual ownership can still win. Specialist tax advice is essential.

Rent Levels and Achievable Borrowing

Because borrowing capacity depends on rent, increasing the rent increases the mortgage. A £100/month rent increase allows approximately £14,000 additional borrowing at 145% ICR and 5.82% stress. Landlords nearing remortgage therefore want rent levels to reflect market conditions.

However, Section 21 reforms (the Renters Rights Bill, due to be enacted in late 2025 or 2026) are removing the Section 21 "no-fault" eviction route and require court approval for most evictions. This makes it harder to re-let at higher market rent between tenancies. Landlords facing remortgage should review the rent with a letting agent; if the current rent is below market, an increase may be justified.

Lenders use the lower of actual rent (tenancy agreement) and surveyor-assessed market rent. A surveyor may value the achievable rent below actual if a tenancy is over-rented. The surveyor's figure binds, not your current rent.

LTV and Minimum Equity

BTL maximum LTV is typically 75% to 80%, lower than residential. Remortgaging above 75% LTV narrows the lender panel significantly. Most of the competitive 2026 BTL rates are at 60% or 65% LTV; 75% LTV adds 0.30% to 0.50%; 80% LTV adds a further 0.40% and is offered by only a handful of specialist lenders. Holiday-let and HMO products have even tighter LTV caps, often 70% or 75%, and apply additional stress criteria around occupancy seasonality.

If property values have fallen (regional BTL markets in the North East and parts of Wales saw 3-5% declines in 2024-2025), your LTV may have risen. Re-check the valuation before assuming the same LTV band. A post-code specific AVM from Zoopla or Hometrack is a useful pre-check. If the AVM comes back significantly below your expectation, consider commissioning a RICS valuation before application; a challenged AVM is harder to reverse than a well-evidenced starting position.

Paying down the loan to stay within a lower LTV band is often the best use of retained rental profits. Moving from 76% to 74% LTV can unlock 0.30% lower rate, saving £600 per year on a £200,000 loan over a 5-year fix = £3,000. Much better return than holding cash on deposit. For limited company landlords, retained rental profits accumulate inside the company; using them to reduce debt is often more tax-efficient than extracting as dividends and paying personal tax.

One more LTV lever: if you hold multiple BTLs, consider which to remortgage first. Properties near an LTV boundary benefit most from the fresh valuation that a remortgage triggers. Properties with already-comfortable LTV (below 60%) can simply product-transfer with the existing lender to avoid legal fees and faff. Sequencing portfolio remortgages strategically can save thousands over a decade.