For North East landlords juggling multiple properties and multiple mortgages, a portfolio mortgage can revolutionise the way that you manage your loans.
If you possess a large portfolio of multiple buy-to-let properties in the North East of England, we’re sure you don’t need us to tell you just how much of a headache it can be to try and organise your monthly outgoings. A potential solution to help you ease the chaos of your buy-to-lets? A portfolio mortgage. Today, we’re going to give you the lowdown on what exactly a portfolio mortgage is, how it works and the ways in which it can benefit you as a landlord.
What is a portfolio mortgage, exactly?
A portfolio mortgage is designed to enable landlords to place all of their buy-to-let mortgages under the umbrella of one single loan. This singular mortgage is treated as one account in its own right. Typically, from a lender’s perspective, four properties are the minimum for a portfolio.
A portfolio mortgage is one that your lender originates and retains, rather than offloading it onto the secondary mortgage market. Because this type of loan is kept within the lender’s own portfolio, the lender is able to set the standards themselves. Often, this can work out favourably for those borrowing.
Consolidated under a single portfolio mortgage, your buy-to-let portfolio of North East properties will be registered as a limited company. This means that all of your finances and expenditures go through the portfolio as a business, opening up the possibility for you to cash in on any potential tax efficacies that may be available. Not bad, huh?
Portfolio mortgages present particularly alluring benefits to those investors who are looking to purchase several properties at once or are perhaps seeking to remortgage their current buy-to-lets under one provider.
So, if the thought of doing away with multiple mortgages and multiple lenders for your North East buy-to-lets sounds appealing, a portfolio mortgage could certainly be for you.
How is affordability calculated for portfolio mortgages?
The affordability models for buy-to-let properties are based on both the rental income that the property is forecast to receive, along with your own circumstances as a landlord.
When it comes to portfolio lending, your prospective lender will consider your entire portfolio, in order to ensure that you are not overstretching yourself and your capabilities when it comes to how much you are borrowing. Further factors for consideration include your other assets, liabilities and income. Some lenders, however, do not require an income outside of your buy-to-lets and offer loans known as buy-to-let mortgages for professional landlords.
Are there any rules for owning multiple buy-to-let properties?
As it stands, there’s no limit to the number of properties you can have within one single portfolio, although the typical minimum is four. As you explore your options from lender to lender, you may discover that some mortgage lenders outline their own internal cap on the number of properties that you can own, or alternatively, on the total amount that you can borrow.
Whilst there are no particular ‘rules’ across the board, per se, the Bank of England’s Prudential Regulation Authority (PRA) did introduce a number of new underwriting standards for lenders back in 2016. These rules include stricter affordability tests and extra checks.
If you are keen to begin a buy-to-let mortgage portfolio or are looking to expand upon an existing portfolio, it’s essential that you receive some quality, independent financial advice. Expert advice can open you up to the best deals that the market has to offer and allow you to avoid a crummy deal on your interest rates. Speak with an adviser at The Mortgage Brokerage and we can supercharge your ambitions as a North East portfolio landlord and guide you through the lending process from start to finish.
*Disclaimer: Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.*
Looking to expand your horizons as a North East buy-to-let landlord? Get in touch with us today and one of our excellent advisers can walk you through all of your options.