- Buy-to-let borrowing is set mainly by the rent, not your salary, which helps the self-employed.
- Lenders apply an interest coverage ratio (often 125% or 145%) at a stressed interest rate.
- Holding the property in a limited company often allows a lower coverage ratio, so more borrowing.
- You usually still need to clear a minimum personal income threshold to be eligible.
- Section 24 means personal-name landlords no longer deduct mortgage interest in full, changing the personal-vs-Ltd sums.
Stress-test the rent
Why rent leads, not salary
Residential mortgages are capped by your income. Buy-to-let mortgages are capped by the property's rent, because the rent is what repays the loan. That is genuinely helpful if you are self-employed with variable or tax-optimised income: a strong rental figure can support a large loan even in a year your personal income looks modest.
The calculator above shows the core test. Higher rent, or a lower coverage ratio, lifts the maximum loan.
Interest coverage ratios and stress rates
Two numbers drive buy-to-let affordability:
- Interest coverage ratio (ICR). The rent must exceed the mortgage interest by a margin, often 125% for basic-rate and limited-company borrowers, 145% for higher-rate taxpayers.
- Stress rate. Lenders test the rent against a notional interest rate higher than the actual one, commonly around 5.5%, to check it still works if rates rise.
So a property is assessed not at today's rate, but at a stressed rate with a coverage cushion on top. That is why two borrowers with the same rent can be offered very different loans.
Personal name versus limited company
Many landlords now buy through a limited company, and the mortgage maths is part of why. Limited-company buy-to-let lending often uses the lower 125% coverage ratio rather than 145%, which can increase the loan. The bigger driver, though, is tax: since Section 24, individual landlords can no longer deduct mortgage interest from rental income in full, only a 20% tax credit, while companies still deduct interest as a cost.
A limited company is not automatically better. It brings its own costs, Corporation Tax on profits, and tax on getting money back out. This is a model-it-properly decision, not a default.
Where your own income still matters
Rent sets the loan size, but most lenders still want to see a minimum personal income (often around £25,000) to prove you can cover voids and maintenance. As a self-employed applicant you will likely be asked for the same SA302s and tax year overviews as for a residential mortgage, even though they do not set the borrowing.
Take Home models the personal-name versus limited-company decision, including the Section 24 impact, so you can see the after-tax difference before you choose how to hold the property.