27th February 2024
Development Finance for First Time Developers
READ MORE
Portfolio Landlord Mortgages
If you are a portfolio landlord, our team of award winning brokers would be pleased to assist. At Mortgage Lane, many of our advisors are portfolio landlords themselves, so we really understand the value in the products we recommend. We are committed to adding value to our portfolio landlords with our creative application to product selection and speed.
1
Information gathering and advice
The first process in your portfolio landlord mortgage application will be gathering or updating information in relation to the property, tenants, or yourself. Once this has been established your expert mortgage broker will make a product recommendation, or potentially multiple if more cost effective.
2
Credit approval
Once you are satisfied with the product recommended and have confirmed to proceed, this will usually be submitted the same day to give you a decision, until this point there is still nothing to pay! As long as the Agreement in Principle (AIP) was approved, we can move to application stage where fees become payable.
3
Application, valuation & underwrite
Once the application is submitted, your valuation will be booked in and most of the time (depending on the lender). This will usually completed once your initial underwriting has been completed. Once the valuation is returned, if acceptable, the lender would then look to make a formal offer. You can then move to legal stage.
4
Offer and completion
Once you have had your buy to let mortgage offer, you will require adequate legal advice and then once you’re happy, your solicitor can draw this down once the legal requirements are satisfied. Your broker at Mortgage Lane will always be checking in on the application post offer, so we are chasing for you too!
Types of Portfolio Landlord Mortgages
Additional purchases
We assist both business owners and investors with Commercial Mortgage advice. Below we explain all the types of variations you might come across as well as information on different ownership types and how this can impact your mortgage options.
Mortgage Lane specialises in connecting portfolio landlords with the right mortgages for expanding their property holdings. Our approach involves meticulously analysing your portfolio’s overall gearing and Loan to Value (LTV) to recommend the most cost-effective lending options. We understand that financing for portfolio landlords often requires a more specialised and nuanced approach, especially when adding new properties.
Navigating the complexities of portfolio mortgages demands expert advice, a service we proudly offer. A notable point for portfolio landlords is the stricter lending criteria of many high street banks, which frequently do not lend to applicants with four or more mortgaged properties. This is where our expertise becomes invaluable.
At Mortgage Lane, we cater to a diverse range of investors, leveraging our access to a broad spectrum of lenders, including both high street banks and alternative financing options. Our goal is to find the most suitable lender for your specific requirements, ensuring a smooth and successful expansion of your property portfolio.
Portfolio mortgages
At Mortgage Lane, we specialise in facilitating portfolio mortgages for our clients. A portfolio mortgage consolidates multiple property loans into a single mortgage product, using each asset in the portfolio as security for the loan. This approach is particularly beneficial for clients looking to streamline their debts with one lender, which can lead to significant savings on upfront costs such as legal, broker, and valuation fees.
Portfolio mortgages are often advantageous for larger loan amounts, where we can negotiate bespoke rates with banks. These tailored solutions not only provide potential savings on initial costs but also may offer discounted product options. Additionally, for portfolio landlords with smaller assets, clustering properties together in a portfolio mortgage can help meet minimum loan size requirements, thereby accessing more favourable lending terms.
Mortgage Lane’s expertise in this area ensures that our clients receive tailored advice and efficient mortgage solutions that align with their investment strategies and financial goals.
Portfolio incorporation
Mortgage Lane provides comprehensive assistance to clients seeking to transition their property portfolios into a limited company structure, from partnerships to LLPs, or other incorporation forms. When clients opt to use incorporation relief based on tax advice, it’s crucial to inform your broker early in the process. This ensures we can verify with potential lenders that they accept the specific tax methods being used, especially regarding their impact on stamp duty transactions at completion.
Given that tax considerations are a legal aspect of these transactions, we strongly recommend seeking guidance from a tax expert. Professional tax advice is essential before committing to any incorporation relief method, to ensure compliance and optimise financial outcomes. Mortgage Lane is dedicated to guiding clients through this intricate process, aligning financial strategies with legal and tax requirements for a seamless incorporation transition
Remortgaging
Mortgage Lane adeptly assists portfolio landlords in refinancing existing properties, optimising the process to raise funds for new purchases. We focus on evaluating your portfolio’s current gearing and Loan to Value (LTV) to identify the most financially beneficial refinancing options. Recognising the intricacies of portfolio refinancing, we offer specialised guidance to navigate this complex area.
Expertise is key in this sector, particularly given the stringent lending criteria of many high street banks, which often restrict lending to individuals with four or more mortgaged properties. This is where Mortgage Lane’s proficiency is crucial.
We serve a wide range of investors, utilising our comprehensive network of lenders, which includes both high street banks and alternative finance providers. Our objective is to pinpoint the lender that best suits your unique refinancing needs, ensuring efficient access to capital for your next property investment.
Hunting Licences
For portfolio landlords who also engage in property development, accessing additional capital efficiently is crucial. A hunting licence offers a flexible financing solution, allowing them to borrow against their existing portfolio. This arrangement typically involves setting up an offset account, where interest is only charged on the borrowed amount at the start of each month.
This method is particularly cost-effective compared to arranging individual finance for each new purchase, as it significantly reduces setup costs. The hunting licence acts as a revolving credit facility, providing portfolio landlords with rapid access to funds. This quick capital availability is especially beneficial for meeting the tight deadlines often associated with traditional property auctions.
Mortgage Lane assists portfolio landlords in setting up hunting licences, ensuring they have the financial agility to capitalise on new opportunities as they arise, without the burden of repeated setup fees.
Portfolio Landlord Criteria
At the start of your property journey your mortgage options are predominantly with high street lenders. However, as your portfolio grows and you acquire four or more mortgaged buy to let properties, lenders will classify you as a 'portfolio landlord.' At this stage, high street lenders typically impose stricter stress tests and criteria on portfolio income and Loan to Value (LTV) ratios. This shift often means that your mortgage needs become more complex and better suited to Specialist Lending. At Mortgage Lane, we excel in navigating these specialist lending options, ensuring you find the right mortgage solutions as a growing portfolio landlord.EXPERTS IN PORTFOLIO LANDLORD CRITERIA
Sometimes a portfolio landlord will require mortgage lenders that have relaxed criteria around portfolio stress testing, LTV limits and minimum incomes. We also assist many of our applicants with portfolio incorporation into a limited company or LLP and in some cases where applicants are using an incorporation relief tax method. Specialist scenarios we assist with:
- Portfolio mortgages
- Portfolio Incorporation
- Applicants are not a homeowner
- Only property income
- Adverse credit
- Expats
- Foreign nationals
- Sharia Compliant
TRY OUR PORTFOLIO LANDLORD MORTGAGE CALCULATOR
ANSWERS TO COMMON QUESTIONS AND QUERIES ABOUT PORTFOLIO LANDLORD MORTGAGES
How are portfolios stressed for lending?
Buy to let mortgage lenders will use the rental income of the securities, which up the portfolio properties you are buying or remortgaging. The high street lenders that offer the cheapest rates, are often less suitable for portfolio landlords due to their harsher stress testing of around 145% at a nominal rate of 5.5%. Please see our stress testing calculator here.
Specialist lenders are often more relaxed on portfolio stress testing and stress testing on portfolio rent can be seen as low as 100% rental coverage with a stress of 5%
Do portfolio Mortgage Lenders require additional documentation?
Following the newly issued PRA requirements, each mortgage provider is obliged to assess these types of individual’s portfolios when they own 4 or more “mortgaged” buy to let properties. Whilst there are not precise guidelines which have been issued, each lender has a duty to ensure a portfolio landlord is appropriately evaluated in several different areas including: portfolio rental cover, gearing, as well as their assets, liabilities and cashflow namely via a ‘Business Plan’. We can assist you with how to present business plans that will accurately and positively illustrate your investment experience.
Will lenders accept my portfolio incorporation relief tax method?
We also assist many applicants looking to incorporate their property portfolio into a limited company, or sometimes from a partnership to an LLP and occasionally. If you are using any form of incorporation relief and you have had tax advice, it will be advised to let your broker know of this early on to confirm with any potential lenders that they approve of that tax method that may also impact your stamp duty transaction on completion. Due to tax being a lawful aspect of this transaction, we always recommend to seek tax advice from a proven expert before committing to an advised incorporation relief tax method.
How much equity will I need for a portfolio landlord mortgage?
Lenders have adopted a more cautious approach in their lending practices. This caution often manifests in the form of LTV (Loan to Value) caps for the overall property portfolio. It’s common for some lenders to limit the portfolio’s LTV to between 65-80%. This means that for a new purchase or remortgage, these lenders might not approve applications if it results in the portfolio’s LTV exceeding this range upon completion of the transaction.
However, it’s important to note that not all lenders implement these LTV caps. Lending criteria can vary significantly between different financial institutions. If you find that these LTV restrictions are impacting your investment strategy or loan options, Mortgage Lane is here to assist. Our expertise in navigating the complexities of portfolio lending enables us to identify lenders who may offer more flexible LTV ratios, ensuring you find a mortgage solution that aligns with your portfolio’s needs and goals.
Concentration of ownership with portfolio landlord mortgages?
Mortgage Lane specialises in providing solutions for portfolio landlord mortgages, particularly when addressing the challenges of property concentration within a landlord’s portfolio. Understanding and effectively managing this concentration is crucial for securing favourable mortgage outcomes.
The Significance of Property Concentration in Portfolio Landlord Mortgages
Defining Concentration in Portfolio Lending: Concentration refers to the percentage of properties a portfolio landlord owns in a specific area, like a street or block. High concentration levels can be a concern for lenders due to potential market impact and risk concentration.
Diverse Lender Approaches to Concentration
Varied Lender Policies: Lenders have differing policies on concentration for portfolio landlord mortgages. Some may impose limits, such as a maximum of 10% ownership in a particular area, to mitigate risk. Others might be more flexible, lacking strict concentration requirements.
Mortgage Lane’s Strategies for Managing Concentration Issues
Collaborating with Accommodative Lenders: We work with a range of lenders who are comfortable with various levels of concentration in a portfolio landlord’s property holdings. This flexibility is essential for landlords seeking to expand or consolidate their portfolios in specific areas.
Tackling Concentration Limits: When high concentration poses a hurdle, Mortgage Lane employs strategies like engaging multiple lenders to distribute lending across different areas, thereby managing concentration levels within the portfolio.
Proactive Approach in Lender Selection: We carefully assess a lender’s existing exposure in a targeted area before application, ensuring a higher likelihood of mortgage approval for portfolio landlord mortgages. This approach minimises the risk of rejection due to over-concentration.
Supporting Portfolio Landlord Mortgage Success
Our aim at Mortgage Lane is to facilitate the growth and management of our clients’ property portfolios. We provide tailored advice and solutions for portfolio landlord mortgages, ensuring landlords can navigate concentration challenges and successfully achieve their investment goals.
What entities can take a portfolio landlord mortgage?
We arrange cost-effective Portfolio Landlord mortgages for:
- Individuals
- Special Purchase Vehicles/Limited Companies
- Limited Liability Partnerships (LLP)
- Trading companies
- Charities
- On/Offshore Trusts
Are portfolio landlord mortgages regulated?
It is important to note that portfolio landlord mortgages are not covered by the Financial Services Compensation Scheme, so borrowers should ensure they are dealing with a reputable lender.
Is there a maximum amount of properties I can own when obtaining a mortgage?
No.
Some lenders may have maximum property limits, when approving applications. However some lenders do have so many conditions when offering mortgages to portfolio landlords
What income do I need to get a portfolio landlord mortgage?
Whilst some mortgage lenders do enforce a minimum income requirement (often £25,000), the majority of lenders do not have a minimum income requirement, as long as some level of an income can be evidenced.
Every lender will have their own individual tailored criteria, which may differentiate slightly.
Due to the extensive level of experience portfolio landlords hold, lenders often do not require a minimum income for these individuals. Whereas there are typically income barriers in place for first time investors to be deemed as eligible.
What is a portfolio landlord mortgage?
A portfolio landlord mortgage is used to purchase or remortgage a property, this can be for Buy to Let, or Commercial use.
Finance for portfolio landlords can be much more specialist and at times a little complex, requiring advice from an expert mortgage professional. A primary example which you may notice, some Highstreet banks typically have much more stringent criteria and do not lend where an applicant will own four or more mortgaged properties. We can assist a multitude of investors, having access to a wide array of Highstreet as well as diverse specialist lenders to locate the most suitable lender for you.
Do portfolio mortgages allow you to overpay?
Yes, some lenders offer a 10% overpayment facility, per annum.
This means that if your principal loan was £125,000 then you could repay £12,500 per annum as an overpayment without incurring a penalty within your fixed term.
However, it is important to note that many lenders are stripping this from their product ranges, so it is always worth checking to avoid paying exit fees on amounts repaid.
How do I get a portfolio landlord mortgage with bad credit?
Just like residential mortgages, there are also portfolio landlord mortgage lenders that allow for applicants with adverse credit. So whether you have missed payments, CCJs, defaults or even an IVA, we can still source you with a suitable portfolio landlord lender. If you have discharged from bankruptcy then your options will become better after 3 years and also subsequently 6 years.
Where do you broker Portfolio Landlord mortgages in the UK?
We assist our clients with portfolio landlord mortgages in England, Wales, Scotland and Northen Ireland.
Learn more about mortgages with Mortgage Lane
At Mortgage Lane, we see the most complex of portfolio landlord mortgage applications, some of which make a good read for investors looking to learn from other applicants challenges, or for those effected by the topics! See more buy to let mortgage topics covered in our blog here.
BEGIN YOUR PORTFOLIO LANDLORD MORTGAGE JOURNEY WITH US TODAY
Let us know about your enquiry and one of the team at Mortgage Lane will be in contact to assist!