Buy-to-Let Mortgages for Portfolio Landlords
Buy-to-Let properties can appear to be very attractive investments. As tangible assets, they can work out very successfully for many people.
However, the financial landscape tends to shift and change over the course of time. Therefore, it’s always worth paying attention to how your portfolio of Buy-to-Let properties can best be managed.
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What we cover in this guide
What is a Buy-to-Let portfolio mortgage?s
A Buy-to-Let portfolio mortgage is a product designed for those landlords who have, or plan to have, two or more properties under their ownership.
Treated as a kind of ‘mortgage account’ by the lender, a portfolio mortgage can incorporate mortgages for a variety of properties.
It’s possible that each property will have varying interest rates across the grouping. The rental income from all the properties and the loan-to-value rates are averaged out. This is so that the total surplus equity can be used in the borrower’s favour when looking to add more properties.
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One example would be a landlord whose portfolio has a total value of £2.5M, with an outstanding amount on the collective loan of £1.5M. If we assume that the maximum loan-to-value ratio is 75% (in this case a value of £1.875M). This would give you a surplus of £375,000 with which to extend your portfolio further.
And if this landlord buys a property for £200,000, they will still have an available credit of £325,000. This is because once the new property is added, the new total portfolio value will be £2.7M, with an outstanding loan amount of £1.7M. Again, with a maximum loan-to-value ratio of 75%, this leaves £325,000.
In this way, you can see that the more properties a landlord owns, the greater the risk is diffused across them. Not only does it become easier to use the total credit facility, but it allows for income from all inhabited properties to make up the difference during periods where income from one or two properties may drop due to standing vacant.
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Why you would like a Buy to Let mortgage is unique to you. We approach mortgages for your individual needs.
There are a variety of things to consider when looking into a Buy to Let mortgage.
The best way to find out if you qualify for a buy to let mortgage is to speak to a mortgage adviser.
Portfolio mortgage lenders for landlords
Over the recent years, investing in a Buy-to-Let has become much easier. This is due to the fact that there have been many lenders opening up their services to landlords.
While there are a range of lenders and products, each will come with their own criteria. And the way in which you’re assessed will be different based on the lender.
When assessing you for a mortgage, lenders will look at the following:
- Deposit you are able to supply.
- Amount of equity in your portfolio.
- Your cash flow.
- Size of your portfolio.
- Your experience.
- Size and condition of the property you want to buy.
- Location of the property.
With all these in-depth checks, it can be difficult to know if you are in a good position to apply. If you want to discuss your options, why not get in touch today? Our expert brokers will be able to understand your situation and advise you on the best path to take.
Getting the best Buy-to-Let mortgages rates as a portfolio landlord
Portfolio landlord mortgage rates are like any mortgage rates, they are always changing. Therefore, finding the best rate for you might not always be straightforward.
To ensure you open yourself up to the best products and rates, keep in mind the following:
- Providing a larger deposit will allow you to access better deals. This is because you are borrowing less money from the lender, so you are a lower risk to them. Therefore, they don’t need to offset this risk by imposing higher rates.
- Mortgage brokers can access exclusive deals you may not be able to. Some lenders don’t advertise their services to the general public. This means that a broker is required to use them. This will open up your options further, improving your chances of obtaining a better rate.
- Your credit score is a crucial element of any lender’s affordability assessment, so ensuring it’s at a good level will do you a big favour when applying.
Is there a limit on the number of Buy-to-Let properties you can have?
There is no policy or legislation that states how many properties you can have. Instead, restrictions may be imposed based on your personal circumstances, such as your finances.
Lenders want to minimise their risk of exposure; therefore, may limit how many mortgages you can obtain with them.
As an example, they may only limit one individual to have 5 mortgages with them. They could also set a limit of 10 mortgaged properties in your portfolio between them and other lenders.
Mortgage broker for portfolio landlords
If you’d like to explore the possibilities of a portfolio landlord mortgage, then it’s important that you seek professional, experienced advice.
Our specialist team at The Mortgage Centres has an in-depth knowledge and understanding of every aspect of the mortgage market.
Get in touch today to explore your options and get started on your new mortgage journey.
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