What is a portfolio landlord?
As soon as you own more than one Buy-to-Let property, you could be regarded as a ‘portfolio landlord’. This is someone who makes their income from rent charged to tenants living in a range of properties. Many believe you’re a portfolio landlord when you have Buy-to-Let mortgages on four or more properties.
When applying for a Buy-to-Let mortgage, lenders may determine your status as a portfolio landlord in two ways. Either via ‘sole applications’ or ‘joint’ (or more) applications.
Sole applications – if you own four or more mortgaged Buy-to-Let properties (including the one you are applying for), the lender will class you as a portfolio landlord. But, they will base their mortgage calculations on just this property.
Joint (or more) applications – this applies if you’re applying with a partner, who may co-own some or all of your investment properties and perhaps others separately. In this case, the lender will look at the loan-to-value ratio of the total number of properties in your collective portfolio, including the property you are applying for.
If in any doubt about which lenders may have the most appropriate criteria, why not reach out today? Our expert portfolio landlord mortgage advisors are on hand to discuss your requirements.
What is a Buy-to-Let mortgage for portfolio landlords?
Buy-to-Let portfolio mortgages are intended for those landlords who have – or who plan to have – more than one Buy-to-Let property.
Although a portfolio mortgage can incorporate mortgages for several properties, it’s treated as a single mortgage account by the lender. Rental income and the loan-to-value ratio are averaged out across the portfolio. This means any surplus may be leveraged to extend the portfolio.
Say, for example, that the total value of the portfolio is £2.5 million, and the outstanding loan amount is £1.5 million. Assuming that the maximum loan-to-value ratio of the total portfolio is 75%, that means you potentially have access to additional borrowing of £375,000 which you can use to extend your portfolio.
Say you purchase a property worth £200,000; once that has been added to your portfolio, you still have available credit of £325,000. That is derived from a new total portfolio value of £2.7 million (£2.5 million plus the new property valued at £200,000) with an outstanding total loan amount of £1.7 million (the previous loan amount of £1.5 million plus the mortgage against the new property).
The more properties are owned, the more any risk is spread. It becomes easier not only to draw on the revolving credit facility the portfolio mortgage offers, but also to accommodate periods when rental properties are untenanted. The overall income from the tenanted properties will make up the shortfall.
Mortgage lenders for portfolio landlords
In the past, if you were a portfolio landlord, you would have had to use a specialist, niche-market mortgage lender. However, in more recent times, investing in a Buy-to-Let property has become far more mainstream. Portfolio landlords can now access mortgage products from lenders on every point of the spectrum, including highstreet lenders.
This means there is now a huge range of products available to Buy-to-Let portfolio landlords, making for a selection of competitive deals. Each product and lenders will have their own criteria for lending and methods of assessing a borrower’s suitability for a mortgage.
Doing your own research into every product on offer would be a highly exhaustive and time-consuming task. In addition, owing to the dynamic nature of the mortgage market, you’ll find that deals appear and disappear very quickly.
The other factor to consider is your own circumstances as a portfolio landlord. The most suitable lender for you might vary according to a range of things, including:
- Your experience
- Portfolio size
- Amount of equity in your portfolio
- Your cash flow
- Cash reserves
- The deposit you are able to supply
- The location, size, and condition of the property you want to buy
Bearing all this in mind, it would be impractical to list what we consider to be the ‘best’ lenders.
To discover the right lender to suit your situation, targets, and requirements, we’ll need to go over your current position and get a thorough overview of where you stand. Contact us now to book a free, no-obligation discussion.
Finding the best Buy-to-Let mortgage rates as a portfolio landlord
Portfolio landlords will have access to the same rates as an ordinary person applying for a Buy-to-Let mortgage. So, how do you ensure you receive best portfolio landlord mortgage rates?
There are a few things you can do in order to make yourself more appealing to lenders. In turn, they are likely to offer you a better deal with a competitive rate. These things include:
- Suppling a larger deposit. As you are borrowing less from the lender, you are seen as less risky. Therefore, your chances of getting a good rate increase.
- Ensuring your credit score is in a good place. A key element of a lender’s assessments will be looking at your credit history. Therefore, if it’s good, you’re again seen as less of a risk.
- One final thing you can do to improve your chances is use a specialist mortgage broker. Brokers have access to lenders that may not advertise to the general public, in turn opening up your options even more. By having this selection it will give you the best chance of obtaining a competitive interest rate.
Portfolio landlords mortgage advice
It’s vital to get reliable, expert advice when entering into any mortgage agreements. This is especially true as a Buy-to-Let landlord operating within current regulations.
Specialist mortgage brokers have the broad overview of the current market. This knowledge is necessary to quickly understand how you can fulfil your ambitions for your business and identify the right lender to help with your property purchase.
A specialist mortgage advisor will make sure your application stands the greatest chance of success. We do this by assessing your personal finances, your current level of debt and the probable costs associated with the property you are aiming to buy. And then balancing this against the anticipated income from the property and the strength of your current portfolio.
The broker will also know which lenders will have the right Buy-to-Let mortgage scheme to suit your needs.
So no matter if you‘re a new landlord or if you already have several properties within your portfolio, reach out today. Our expert advisors are on hand, ready to discuss your circumstances over a free, no-obligation discussion.
