Free Calculator
UK BTL ICR Calculator
Will your buy-to-let pass the lender's PRA stress test? Check the rent-to-stressed-interest ratio against the 125% basic-rate or 145% higher-rate threshold.
Your ICR
102%
Below the 145% threshold for higher-rate borrowers — lender will likely decline or restrict the loan.
Working
How to make it pass
- Lower the LTV. Drop to 70% — bigger deposit, smaller stressed interest payment.
- Push the rent. You need £1700/month minimum at this LTV — verify against local lettings comps.
- 5-year fix. Some lenders use a softer stress rate (just the product rate) for 5y+ fixes — worth asking your broker.
ICR is one gate — there are others
A deal that passes ICR can still bleed monthly cashflow, fail the +2% rate stress test, or miss your return targets. PropQuant runs the full picture — yields, cashflow, IRR, stress tests, the offer price you can defend.
Sign up free →Related reading
Frequently asked questions
What is ICR (Interest Coverage Ratio)?+
ICR is the ratio of monthly rent to monthly mortgage interest at a stressed rate. UK BTL lenders use it to test affordability — they want comfort that the rent comfortably covers the interest even if rates rise. The calculation is rent ÷ (loan amount × stress rate ÷ 12).
What's the minimum ICR for a BTL mortgage?+
Thresholds vary by tax position and lender. Limited companies typically need 125%. Basic-rate individual landlords usually need 125-140% depending on the lender (many mainstream lenders apply 140% for personal-name basic-rate borrowers — don't assume a 125% pass will clear underwriting). Higher-rate individual landlords face 145% as standard. Specialist or portfolio products can require 160%+. Below the threshold the lender either declines or restricts you to a smaller loan.
What's the lender stress rate, and why is it different from my product rate?+
Per PRA SS13/16 underwriting standards, BTL lenders must stress-test affordability at a rate higher than the product rate. Most apply the higher of (a) 5.5% floor or (b) the product rate plus 2%. PRA itself doesn't fix the rate — lenders set it within PRA's principles. Even if you're getting a 4.5% product, your ICR is typically calculated at 6.5% (4.5% + 2%) for affordability. Some lenders soften this for 5-year+ fixes (often product rate plus 1%, or just the product rate), so the deal that fails on a 2-year fix can pass on a 5-year.
How does ICR differ from the actual cashflow on my BTL?+
ICR is a lender's affordability gate — it's a regulatory test using a stressed rate, ignoring operating costs (mgmt, voids, maintenance, insurance). Real cashflow is rent minus actual mortgage minus all operating costs. A deal can pass ICR comfortably and still bleed cashflow each month after costs — and vice versa. Both matter.
Why is the higher-rate threshold (145%) tighter than basic-rate (125%)?+
Because of Section 24. Higher-rate landlords can no longer fully deduct mortgage interest from rental income for tax — they only get a 20% tax credit. Lenders adjust ICR upward to reflect that higher-rate landlords pay more tax on the same rent, so they need more coverage to break even after tax.
Can I improve my ICR?+
Three levers: increase rent (push to market), decrease loan amount (lower LTV — bigger deposit), or pick a 5-year fixed product (some lenders use a softer stress rate for 5y+ fixes — typically just the product rate, not +2%). The biggest lever is usually loan amount.
Does ICR apply to limited company BTL?+
Yes, but the threshold is typically 125% (treated like basic-rate) because the company pays corporation tax not income tax. Limited company products are often more competitive on ICR than personal-name higher-rate.