Rental Income vs Mortgage Cost Calculator

A rental only generates positive cashflow when rent covers the mortgage plus running costs. For example, 1,500 rent minus 900 mortgage minus 300 running costs (letting fees, maintenance, insurance) leaves a 300 monthly surplus. A negative figure means the shortfall is funded from other income, and any overall return then depends on capital appreciation rather than monthly cashflow.

A worked example

As an illustration: monthly rent of 1,500, a monthly mortgage payment of 900, and monthly running costs of 300. The tool returns 300.00. Adjust any input and the result updates as you type, with no submit button. The value of working this way is seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Monthly Rent, Monthly Mortgage Payment, and Monthly Running Costs. Rent and the mortgage payment usually tip the answer one way or the other. Flipping each value past a round threshold shows which input the cashflow is most sensitive to.

The formula behind this

This is a simple monthly cashflow calculation: rent minus mortgage minus costs. It does not model void periods (vacancy), which commonly run 5–10% of annual rent. The After Vacancy line applies a 5% reduction to gross rent as a rough approximation. Everything the calculator does is shown in the formula box below, so the math can be checked against a spreadsheet.

Reading the secondary figures

Alongside the monthly surplus or shortfall, the tool shows annual cashflow, the rent-to-mortgage ratio (rent measured against the mortgage payment only, before running costs), the position after a 5% vacancy allowance, and total monthly outgoings. The rent-to-mortgage ratio can read above 100% while monthly cashflow is still negative, because that ratio excludes running costs. The surplus figure is the one that nets everything out.

What this doesn't capture

The figure is cashflow only. It excludes income tax on rent, one-off transaction costs, maintenance emergencies, and capital appreciation. It also treats the mortgage payment as a fixed monthly figure, so it does not model how that payment would change if the interest rate changed at renewal. A tax estimate and a mortgage payment calculator together give a fuller picture.