Who 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 is making their income from rent charged to tenants living in a range of properties.

Although, the general consensus is that you should have four or more Buy-to-Let mortgages to be officially classified as such.

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.

What is a Buy-to-Let portfolio mortgage?

These 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 several properties, it is 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, the total value of the portfolio is £2.5 million, and the outstanding loan amount is £1.5 million.

Let’s also assume that the maximum loan-to-value ratio of the total portfolio is 75%. This means that you potentially have access to additional borrowing of £375,000. This capital can then be used to extend your portfolio.

Say you purchase a property worth £200,000, once it’s 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 that 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 any rent shortfalls.

Portfolio mortgage lenders

In the past, if you were a portfolio landlord you would have had to go to a specialist.

However, in more recent times, investing in a Buy-to-Let property has become far more mainstream. With portfolio landlords being able to access mortgage products from lenders.

There’s now a huge range of products available from a wide variety of lenders. Each has their own rules, criteria for lending and methods of assessing a borrower’s suitability for a mortgage.

Doing your own research into every product on offer is a highly exhaustive and time-consuming task. In addition, the dynamic nature of the mortgage market means you’ll find that deals may disappear and/or interest rates will fluctuate.

Another factor to consider is your own circumstances as a portfolio landlord. The most suitable lender for you might vary according to:

• Your experience.
• Portfolio size.
• Amount of equity in your portfolio.
• Your cash flow.
• Cash reserves.
• The deposit you are able to supply.
• Property 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.

Instead we suggest speaking to an experienced broker. Their knowledge of the market can help a lender to see your personal circumstances in the best light and therefore, increase your chances of being offered a competitive deal. If you want to discuss your options get in touch today for a free consultation.