Buy to let portfolio mortgage lenders and rates in the UK
Over 2.5 million landlords live in the UK. Successful investors have been able to create a portfolio that includes a variety of mortgaged properties. This article will explain how portfolio mortgages work and the rules for owners of multiple investment properties.
We have a few mortgage providers lending to portfolio landlords. We will ensure you match the mortgage lender lending criteria.
Enquire below to start your application today:
What is a portfolio mortgage for buy-to-let? How do they work?
Buy-to-let portfolio mortgages are products that are designed for landlords who have multiple investment properties. They can take out one mortgage to cover all their properties instead of having multiple mortgages.
A portfolio mortgage allows you to keep all your buy-to-let mortgages under the same umbrella.
The portfolio mortgage is treated as one account. Instead of having different mortgage providers for each property, the entire portfolio can be managed by one lender with one monthly payment.
The portfolio is registered as a limited company, and all costs and finances are treated the same as any other business. A portfolio mortgage is only available to landlords with at least four properties.
What are the rules for owning multiple properties that can be used as buy-to-let?
Although there is no limit on the number of properties you can buy, it must be at least four for it to be considered one. Some mortgage lenders may have an internal limit on how many properties you can own or the amount you can borrow to fund your portfolio. This is usually determined on an individual basis.
The Prudential Regulation Authority (PRA) regulates most mortgage lenders who offer buy-to-let loans.
The PRA published a series of new rules in September 2016 to establish stricter underwriting standards for these lenders. These include more stringent affordability tests and additional checks on portfolio landlord mortgages.
Mortgage lenders may require you to provide more documentation. This could lead to slower decisions and more extended applications.
You can speed up the process by working closely with a mortgage broker specialising in portfolio agreements. They will prepare your documentation before you submit your application.
Unless you use a specialist broker, you only have access to a third of the available Buy To Let mortgages.
What qualifies as a “portfolio landlord”?
You are a portfolio landlord if you own four or more mortgaged properties.
You’re not a portfolio landlord if:
- Three investment properties are yours
- Five investment properties are yours, but you only have three that can be mortgaged.
You will be subject to portfolio mortgage underwriting checks if you have more than four properties that are buy-to-let and you have a mortgage. These are also known as portfolio mortgage stress tests.
Lenders will also need to check that you are in a financially stable position. Although different lenders interpret the rules differently, they will all consider your entire portfolio of buy-to-let properties and be likely to take into account:
- Your experience as a landlord
- Information about your mortgages for all your properties that you buy-to-let
- Your assets and liabilities, tax liability included.
- Your portfolio’s historical and future cash flow is expected to be positive.
- Both your income from the property and other sources
Different lenders may interpret the rules differently so that criteria can change. Suppose you have five properties that generate enough rent to pay the mortgage, but one property is not. In that case, one portfolio mortgage company might decline your mortgage application, while another could approve it.
Professional advice is essential if you are looking for a portfolio landlord mortgage. All of the advisors we work with are experts in all aspects of the market who can assess your portfolio and determine which option is best for you.
How many buy-to-let mortgages can you have
There is no limit on the number of buy-to-let mortgages you can own, as long as you meet all the requirements. While each lender may have guidelines regarding the maximum loan they can give an individual, many portfolio lenders will help you grow your investment.
Organising your paperwork and keeping a current property portfolio spreadsheet to increase your buy-to-let investment portfolio is essential. This will ensure that you can provide all relevant information to your advisor.
Tax rules
Homeowners must pay an additional 3% Stamp Duty Land tax if they buy an investment property. Recent changes in tax relief have made it more costly to run a buy-to-let investment. These additional costs are essential to assess any landlord’s buy-to-let portfolio.
Tax relief for buy-to-let mortgage interests was obliterated on April 6, 2020. You cannot deduct any mortgage expenses from your rental income. Investors with a mortgage loan portfolio will be subject to a higher tax bill. This change does not affect private landlords.
A property tax specialist can help you if you are interested in increasing your portfolio of mortgages for buy-to-let properties.
Limited company portfolio mortgages
It can be advantageous for tax purposes for buy-to-let investors to finance multiple mortgages through a limited company in certain circumstances.
Two types of limited companies exist a trading firm and a special-purpose vehicle (SPV).
An SPV is the most popular way for buy-to-let investors to purchase with a limited company. This market has many lenders, and both are available with numerous lending options.
Individuals looking to buy multiple buy-to-let mortgages can now get buy-to-let mortgages at the same rates as limited companies.
Because limited companies are tax-friendly, buy-to-let mortgage lenders will sometimes apply a lower minimum rent stress test to individuals who are higher-rate taxpayers than they do to higher-rate taxpayers.
What is the maximum number of BTL mortgages I can get with a limited company?
There is no limit to how many buy-to-let loans you can have within a limited partnership. The same rules apply when lenders are assessing your portfolio. Some lenders may limit the exposure they will take for one company, while others can limit the number of properties or mortgages.
What qualifies as a “portfolio landlord”?
You are a portfolio landlord if you own four or more mortgaged properties.
You’re not a portfolio landlord if:
- Three investment properties are yours
- Five investment properties are yours, but you only have three that can be mortgaged.
You will be subject to portfolio mortgage underwriting checks if you have more than four properties that are buy-to-let and you have a mortgage. These are also known as portfolio mortgage stress tests.
Lenders will also need to check that you are in a financially stable position. Although different lenders interpret the rules differently, they will all consider your entire portfolio of buy-to-let properties and be likely to take into account:
- Your experience as a landlord
- Information about your mortgages for all your properties that you buy-to-let
- Your assets and liabilities, tax liability included.
- Your portfolio’s historical and future cash flow is expected to be positive.
- Both your income from the property and other sources
Different lenders may interpret the rules differently so that criteria can change. Suppose you have five properties that generate enough rent to pay the mortgage, but one property is not. In that case, one portfolio mortgage company might decline your mortgage application, while another could approve it.
Professional advice is essential if you are looking for a portfolio landlord mortgage. All our advisors are experts in all market aspects who can assess your portfolio and determine which option is best for you.
How many buy-to-let mortgages can you have
There is no limit on the number of buy-to-let mortgages you can own, as long as you meet all the requirements. While each lender may have guidelines regarding the maximum loan they can give an individual, many portfolio lenders will help you grow your investment.
Organising your paperwork and keeping a current property portfolio spreadsheet to increase your buy-to-let investment portfolio is essential. This will ensure that you can provide all relevant information to your advisor.
Limited company portfolio mortgages
It can be advantageous for tax purposes for buy-to-let investors to finance multiple mortgages through a limited company in certain circumstances.
Two types of limited companies exist a trading firm and a special-purpose vehicle (SPV).
An SPV is the most popular way for buy-to-let investors to purchase with a limited company. This market has many lenders, and both are available with plenty of options.
Individuals looking to buy multiple buy-to-mortgages can now get buy-to-let mortgages at the same rates as limited companies.
Limited companies are tax-friendly, and buy-to-let mortgage lenders will sometimes apply a lower minimum rent stress test to individuals who are higher-rate taxpayers than to low-income individuals.
What is the maximum number of BTL mortgages I can get with a limited company?
There is no limit to how many buy-to-let loans you can have within a limited partnership. The same rules apply when lenders are assessing your portfolio. Some lenders may limit the exposure they will take for one company, while others can limit the number of properties or mortgages.
Private landlords may be limited in the number of properties they can have. Some mortgage lenders will determine how many properties you can own. For example, Mansfield Building Society will accept applicants with 15 properties or less.
Others may limit the type of properties that are available to lend. Nottingham Building Society does not lend on single-title multi-unit properties or buy-to-let flats. Also, houses of multiple occupations (HMOs) cannot exceed 25% of an applicant’s portfolio.
How can you determine which lender offers the best rates?
Talk to a mortgage broker here today.
You won’t get the best rates without contacting these portfolio mortgage lenders directly. They would only be able to offer their products, and you could miss out on better deals elsewhere.
If you apply through a broker specialising in portfolio deals, you will have access to all products you are eligible for. Your advisor will also work tirelessly to help secure the financing you need.
How does affordability work for portfolio mortgages
The affordability of buy-to-let is determined by the rental income that the property could generate and your financial situation. A mortgage lender will review your entire portfolio when lending to buy-to-let properties. This is to ensure that you are not borrowing too much.
Lenders may also consider your income, assets, and liabilities. Portfolio mortgage lenders do not require you to have a minimum income. These are also known as professional landlord buy-to-let loans.
Many lenders require that the rental income cover the mortgage if the buyer is a basic rate taxpayer or a limited company. This assumes the mortgage is charged at 5.5%. This increases to 145% and 160% for higher rate taxpayers.
You can borrow more by “Top-slicing”, which is a way to increase your income.
If your rental income doesn’t meet the requirements, the maximum loan amount will be reduced to make the calculation work. You can supplement your rental income with personal income from some mortgage lenders. This is also known as “top slicing” when a landlord uses his or her personal income to make up the shortfall in buy-to-let affordability.
What insurance do I need to insure my property portfolio?
While not required by law, portfolio Insurance can save you time and money.
Portfolio insurance allows you to arrange contents and building coverage across multiple properties. This saves you the time and effort of getting policies and quotes for each property individually. This is often more convenient and less expensive.
We have specialist insurance specialists who can help you navigate the best options. They are independent and will work to find the most affordable coverage for you.
Talk to an expert about portfolio mortgages for buy-to-let properties
The right mortgage advice can make the difference between getting the best deal and paying more interest if you want for buy-to-let mortgages. We work with BTL portfolio mortgage brokers, who have a track record in helping landlords get the financing they need. This was often even when the odds of approval were against them.
You can be sure that your broker-matching service will match you with the right advisor to meet your specific needs. We have thoroughly vetted this buy-to-let expert so that we can guarantee their knowledge and experience.
Call or enquire online to arrange a no-obligation, free chat with a specialist portfolio mortgage broker.
FAQ
Can I buy-to-let property with bad credit?
You don’t need bad credit to become a landlord of a buy-to-let portfolio of mortgage portfolios. It all depends on what type and how recent your credit history has been.
The mortgage lender will want to know the details of the problem, such as when it occurred, what it was for, how long ago it was and whether it has been repaid. To help determine if these are one-off or ongoing credit problems, some lenders may also request information about past credit issues. It is possible to obtain a portfolio mortgage for buy-to-let with bad credit. However, this may mean that you must work with a specialist lender.
For more information, see our guide to mortgages for bad credit.
What types of property can I obtain?
Buy-to-let portfolios are available for a wide range of properties in the UK.
Investors looking to apply for a mortgage to buy a studio flat, an ex-council property, or property of non-standard construction may have fewer options (e.g. Buildings made of unusual materials like concrete and timber. Finding a lender willing to lend on your property is also essential. This may mean using a specialist mortgage provider.
What age restrictions are there for portfolio mortgages?
Lenders require borrowers to be 18 years old. Lenders typically require borrowers over 18 to apply for multiple buy-to-let mortgages. However, many lenders do not have such a requirement.
Is it possible to set up a buy/let property portfolio in Scotland
Scottish mortgage portfolios are gaining popularity as more people move north to benefit from the price difference between English and Scottish cities.
Hometrack shows that Edinburgh’s September 2019 average price was £236,900 compared to London’s £483,000.
he average price in Glasgow is just £124,000. This means that you could own four buy-to -lets at the same price as one in London.
This makes Scotland a compelling proposition for BTL. However, keep in mind that Scotland has its laws regarding property purchases. For example, you must register your property with the local authority before renting it.