Remortgage Payment Shock Calculator: Old Rate vs New Rate, ICR & Rent Cover

Payment shock is what happens when a buy-to-let fixed deal taken out at 2-4% ends and the replacement is priced at today's rates instead. The Bank of England's Bank Rate has sat at 3.75% since the Monetary Policy Committee held it there at its 29 July 2026 meeting, well above where most fixes running off this year were set. This calculator takes your outstanding balance, current rate and mortgage structure, and shows the new monthly payment — at +1 and +2 percentage points and at a rate you choose — alongside whether the rent still clears the lender's rent-cover test and how much of the extra interest the Section 24 credit actually offsets.

Why the comparison is built this way

Both figures use the same outstanding balance and, on a repayment mortgage, the same remaining term, so the rate is the only thing that changes — the same isolation this site's interest-only mortgage calculator uses. Interest-only payment is simply balance × rate ÷ 12; repayment uses the standard fixed-rate amortising-loan formula. Section 24 only ever touches the interest portion of a payment, which is why extra interest is tracked separately from the extra payment throughout.

The rent-cover test hasn't gone away at remortgage

A remortgage is underwritten the same way a purchase is: rent has to cover the mortgage interest, at the new rate, by a margin — commonly 125% for a basic-rate taxpayer or a limited company, up to 145% for a higher-rate individual, since Section 24 leaves them less of the rent after tax. This calculator checks each new-rate scenario the same way our buy-to-let mortgage stress test checks a fresh purchase. Passing that test is a different question from whether the rent covers the actual new payment in cash flow — both are shown, separately, for every scenario.

Why the Section 24 credit doesn't fully absorb a rate rise

Since April 2020, an individual landlord cannot deduct mortgage interest from rental profit; instead they get a tax credit worth 20% of it. That rate is fixed regardless of your tax band, so when a remortgage adds, say, £3,000 a year in interest, the credit is worth 20% of £3,000 — the same £600 whether you pay tax at 20%, 40% or 45%. A higher-rate taxpayer, who would have had 40% relief on that extra interest under the old rules, now keeps only half as much; a basic-rate taxpayer is, broadly, no worse off than before Section 24. The credit rises to 22% from 06/04/2027, not yet in force for the tax year this page compares. See the Section 24 explainer for the full mechanics and who escapes them, and the rental income tax calculator for what the higher payment does to your tax band.

Worked example

A £180,000 interest-only balance at 3.5%, remortgaging with £1,400 rent coming in: the current payment is £525 a month. At +1 percentage point (4.5%) it rises to £675 — up £150 a month, £1,800 a year — and the rent still covers the new interest more than twice over (about 207%), clearing both the 125% and 145% tests. At +2 points (5.5%) the payment reaches £825, up £300 a month, with cover easing to about 170% — still comfortably past both thresholds. That £1,800 or £3,600 of extra annual interest attracts a Section 24 credit of only £360 or £720 respectively — 20% of the increase, whatever the landlord's tax band. A smaller cushion between rent and payment, or a lower starting rate against a large rise, can push the ICR below 125% and the rent below the payment itself — exactly what the cover and shortfall lines flag.

If your deal has already ended

Doing nothing when a fixed rate expires does not freeze the old rate — it moves the loan onto the lender's standard variable rate, typically 6.5% to 7.5% on a buy-to-let according to consumer guidance current in 2026, which is usually higher than any fixed rate on offer. Enter 0 in the months field to see that flagged. The general guidance is to start comparing deals up to six months before a fixed rate ends, since most lenders let a new rate be secured well ahead of the switch date.

What this figure is, and isn't

This is a same-rate, same-term comparison to size the shock, not a mortgage offer, an affordability assessment or a decision in principle — a real remortgage may also change the term or add fees to the loan. Scottish taxpayers get the same 20% Section 24 credit as the rest of the UK, but the marginal rate the extra interest is measured against follows the Scottish bands, not the rest-of-UK ones — check the rental income tax calculator for the actual effect.

Bank of England Bank Rate: "Bank Rate maintained at 3.75%", Monetary Policy Summary and Minutes, 29 July 2026, and the Bank's "current interest rate" explainer, both read 13 Sep 2026. Stress-test mechanics (5.5% / pay rate + 2%, 125%/145% ICR, 75% LTV): Property Filter, "Buy-to-Let Stress Test Guide 2026 UK" (published 11 Sep 2026) and RealYield, "BTL Remortgage Stress Test 2026" (17 Apr 2026), both read 13 Sep 2026 — market conventions, not statutory rates. Remortgage timing and SVR range: MoneySavingExpert, "Getting ready to remortgage" (last updated 17 Mar 2026), read 13 Sep 2026. Section 24 credit rate: site/taxdata.py, verified 29 Aug 2026 from gov.uk. This is a screening tool, not a lender's underwriting decision. General information, not advice.