Calculator
SPV stress test calculator: the 125% limited company ICR, worked on your rent
Lenders decide what a property company can borrow by stressing the rent, typically at 5.5%, against an interest coverage ratio. Limited companies are tested at 125% where higher-rate personal borrowers face 145%, which is most of the argument for the structure. The calculator defaults to the company profile; switch profiles to see the personal comparison.
Different lenders use different ICR and stress rates. We will give you the exact maximum loan available across our 100+ panel for your case.
Why the limited company ICR is 125%, not 145%
The ICR gap is tax logic, not generosity. A higher-rate individual pays income tax on rental profit with only Section 24's 20% interest credit, so the lender demands more headroom, 145%, before the numbers are safe. A company deducts its interest in full and pays corporation tax on what remains, so 125% leaves the same real cushion. The practical effect on a £1,500 rent at a 5.5% stress: roughly £261,000 of borrowing capacity for the SPV against about £225,000 for the higher-rate personal borrower, from the identical property. Whether your case actually reaches the rental-cover maximum then depends on the loan-to-value cap, usually 75% for company lending, and the calculator flags which constraint binds first.
What company borrowers should do with a marginal result
A fail or a near-miss at the default assumptions is not the end of the case. Five-year fixed products tested at the pay rate routinely pass where notional-rate tests fail; some lenders accept top-slicing, using surplus director income to support the shortfall; and stress assumptions genuinely differ across the 100+ panel, including at the intermediary-only lenders who never publish criteria to the public. Placement, not arithmetic, is usually what separates a declined company case from an offer.
The full mechanics are in our guide to ICR stress tests for limited companies, and the product detail lives on the limited company buy-to-let mortgages hub.
Stress test questions, answered
How do you calculate a buy-to-let stress test?
Annual rent divided by the stress rate times the ICR gives the maximum loan. For a limited company at the typical 5.5% stress rate and 125% ICR, £1,500 per month rent supports £18,000 divided by 0.06875, around £261,000, before the loan-to-value cap. The calculator above runs the exact figure for your rent and shows whether rental cover or LTV binds first.
What is the buy-to-let 125% stress test?
The 125% interest coverage ratio requires the rent to exceed the stressed mortgage interest by a quarter. It applies to limited company borrowers and basic-rate personal borrowers; higher-rate personal borrowers are typically tested at 145% because their rental profit is taxed harder. This is the structural advantage of the SPV: the same rent supports roughly 14% more borrowing inside a company than it does for a higher-rate individual.
Why do five-year fixes pass when two-year fixes fail?
On fixes of five years or more, most lenders test the ICR at the pay rate rather than the notional stress rate, because the payment is contractually fixed for longer. A lower test rate against the same rent means a larger maximum loan, which is why five-year company products frequently rescue a case that fails the notional-rate stress on a shorter fix.
Do all lenders use a 5.5% stress rate and 125% ICR?
No, those are market-typical assumptions, not universal rules. Each lender sets its own stress rate, ICR thresholds and rules for pay-rate testing, and several apply different figures by product, property type or portfolio size. Portfolio landlords with four or more mortgaged properties also face an aggregate stress across the whole book. We run your case against the actual criteria across the 100+ panel rather than the market average.
What rent does a limited company need for the loan it wants?
Work the formula backwards: loan times stress rate times ICR, divided by 12. A £200,000 company loan at 5.5% and 125% needs about £1,146 per month. If the achievable rent falls short, the options are a bigger deposit, a five-year fix tested at pay rate, or a lender with softer stress assumptions, all of which we check as a matter of course.