Mortgage interest vs repayment: why landlords often look at interest coverage
BTL affordability checks often focus on stressed interest payments, not full repayment. That’s why landlords hear about ICR: rent must cover a stressed interest cost.
The short answer
In buy-to-let, lenders often test affordability using an interest-focused approach: they compare the expected rent to a stressed interest payment. That’s why landlords hear about ICR (interest coverage ratio) or “rental cover”.
It’s not a single market-wide rule: different lenders can use different assumptions (including how they treat tax and what stress rate they use), so the “right” number depends on the lender’s criteria.
A tiny example
Example (illustrative):
- Monthly rent: £1,100
- Stressed interest-only payment assumed by a lender: £900
ICR (rental cover) here is (£1,100 ÷ £900 ≈ 1.22), or 122%. Some lenders require rent to exceed the stressed interest payment by a margin, so this kind of calculation can cap borrowing even when the rent feels “high”.
Helpful links
- Related calculator: /buy-to-let-mortgage/
- Related calculator: /rental-yield/
- Full guide: /guides/buy-to-let-affordability-icr-stress-rate-explained/
- Glossary: /glossary/icr/
- Glossary: /glossary/stress-rate/