Updated: December 15, 2021

Portfolio Mortgages

Have a property portfolio and looking for a mortgage? This in-depth guide will show you everything you need to know

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Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 15, 2021

A buy-to-let portfolio mortgage can be the perfect solution for landlords with multiple investment properties, making it possible to keep everything within one loan repayment.

By following this guide you’ll have a better understanding of how portfolio mortgages work and where to find the right lenders with the best rates.

What is a portfolio mortgage?

A portfolio mortgage is specifically designed to help buy-to-let landlords with several investment properties bring all their mortgages under one single loan umbrella..

With just one monthly repayment, rather than several, a portfolio mortgage offers a much simpler way for you to keep track of your outgoings across all of your properties.

What is a portfolio landlord?

The official definition of a portfolio landlord, as outlined by the Prudential Regulation Authority (PRA), is anyone who owns four or more mortgaged rental properties, whether on a private basis or through a limited company.

Most lenders will accept a mix of property types, for the purposes of a portfolio mortgage. So, in addition to a traditional buy-to-let other qualifying properties could include holiday lets, HMOs, Consent to Let and Multi Unit freehold properties.

How many properties can be included for a portfolio mortgage?

A large number of lenders don’t impose any maximum number of properties that can be included in their calculations, as long as the total amount of borrowing remains within their lending limits.

There are some lenders who will only allow up to 20 properties overall and a smaller number even less, with either 10 or 8. But, in most cases the number of mortgaged properties you wish to include shouldn’t be an issue.

Are portfolio mortgages cheaper overall?

Potentially, yes. Certainly the overall fee structure should save you money in the long run whilst interest rates are usually in line with standard buy-to-let mortgages.

This coupled with the satisfaction of having all your mortgaged properties under one loan ‘umbrella’, makes portfolio mortgages a very attractive proposition.

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How to get a portfolio mortgage

If you’re a portfolio landlord and see the benefits of having all your mortgaged properties under one home loan, there’s a few simple steps you can take to make the application process much more straightforward.

Prepare your documentation

Having your paperwork ready in advance can help save precious time. For portfolio mortgages, most lenders will want to see a landlord’s business plan, profit & loss accounts and a property schedule.

This is in addition to the usual verification documents you’ll need to submit such as, recent bank statements, proof of income and proof of address. You can find a full list of the paperwork you’ll need in our complete guide to mortgage applications. 

Check your credit reports

It’s a good idea to check all of your credit reports before you get started. This will give you the chance to prepare for any hurdles you might face, as well as challenge inaccuracies and have outdated information removed. You can download your credit reports through our dedicated credit reports hub.

Speak to an experienced portfolio mortgage broker

Once you’ve prepared your documents and credit reports, the smart move next is to speak with a mortgage broker who has experience dealing with these types of home loans.

They can guide you through the process and also help manage your application from start to finish, giving you the best chance of success.

If you get in touch, we can arrange for a broker with previous knowledge of helping landlords get a portfolio mortgage to speak with you directly.

How much can you borrow?

The amount you can borrow for this type of loan will vary from lender to lender. Some lenders will allow a maximum overall borrowing of £3 million across all properties whereas others may allow for higher amounts.

In some cases lenders may also stipulate a maximum amount to borrow per property. So, for example a lender could allow overall borrowing up to £3 million but with a maximum of £1 million per property.

How does the eligibility criteria work?

Lenders base their affordability criteria for buy-to-let mortgages on the income that your property can generate and large portfolio mortgages are no different.

A lender will calculate how much you can borrow by looking at your overall rental income over and above the total mortgage repayments. This is what’s called the rental yield

In most cases, the overall rental yield will usually need to be between 125%-145% of your monthly mortgage repayments.

Prepare for portfolio stress tests

Inclusive of the new portfolio mortgage underwriting checks, you’ll be subject to a stability check from your bank. These are sometimes known as portfolio stress tests and they aim at making sure that you’re in a stable financial position to manage your property investment loans.

Lenders will look at all aspects of your buy-to-let portfolio and are likely to consider:

Bullet Tick Your experience as a landlord
Bullet Tick Details of your buy-to-let property mortgages
Bullet Tick Assets and liabilities, including tax liability
Bullet Tick Historical and forecasted portfolio cash flow
Bullet Tick All other sources of income

Do High Street lenders offer these mortgages?

Yes, there’s a number that offer this type of mortgage but whilst they all work to the same rules, the lending criteria and appetite will vary depending on who you approach.

So, for example, Mansfield Building Society only lends on buy-to-let flats or single title multi unit properties whereas Nottingham BS won’t lend against either of these types of properties. Also, in some cases, houses of multiple occupation (HMOs) can’t make up more than 25% of the applicant’s portfolio.

To give you more of an idea, we’ve compiled a list below with lenders and their criteria:

Mortgage Lender Lending criteria for portfolio mortgage
Natwest Must have at least four mortgaged or unencumbered properties. Excludes properties held in a limited company. Information required in relation to landlord’s experience, use of letting agents and future plans to expand or reduce their portfolio.
Santander Don’t accept portfolio landlords unless the applicant is remortgaging without capital raising and meets their eligibility criteria for transitional arrangements.
Virgin Applicants must have at least 24 months’ experience in letting property at time of application. No more than five properties in the same postcode region are permitted. Personal income is not accepted to cover any shortfalls, though income is verification needed.
Barclays Consider the client’s personal and rental income as well as ongoing credit commitments. Underwriters will assess the speed of portfolio build and capital appreciation, tenant quality and occupancy levels, use of letting/management agents, portfolio strategy and future funding requirements.

This is why, rather than approaching lenders directly, you can save yourself a lot of time and effort speaking with your broker first. They can then search for the right lenders who will accept the type of properties you hold in your portfolio and be able to meet your borrowing requirement.

How do you find the best rates?

Portfolio mortgages are quite ‘niche’, and not all lenders offer this type of home loan. As such, trying to compare interest rates in order to find the best one can be quite tricky and not really something you can do via a quick search on Google.

Each lender will generally assess applications on a case by case basis, taking into account all the factors outlined above before reaching a decision and deciding the best rate they can offer.

If you want the best rates, speak to a broker. They’ll be able to manage your application on your behalf and make sure the lender you choose can offer a competitive rate, based on your circumstances.

Are the tax rules any different for portfolio landlords?

No, not really. Most experienced landlords, with multiple properties, will likely be aware that tax relief on mortgage interest was phased out between 2017-2020.

This has left higher-rate taxpayers with a larger overall tax burden, as the new tax credit system only allows you to claim 20% back, rather than 40%.

Special Purpose Vehicles (SPVs) are one possible option, whereby under a limited company structure you’d then be subject only to corporation tax on the rental profits. It could be worth taking advice on this from a professional tax advisor.

Get matched with an experienced portfolio mortgage broker

If you’re a landlord with multiple properties, even a small reduction on your mortgage rate can make a big difference to your bottom line in the long-term. That’s why it’s well worth working through a mortgage broker who can save you not just money but also time and hassle.

We work with experienced brokers who can help you check you’re mortgage ready, calculate how much you’re eligible to borrow, and then take you directly to the provider who will offer the best rate and most favourable terms.

Call 0808 189 0463 or make an enquiry and we can arrange a free, no-obligation call with a mortgage broker who has the right experience today.

FAQs

Should I take out insurance for my property portfolio?

With portfolio insurance, you can make sure your buildings and contents are covered across a number of properties. This will save time when it comes to getting individual quotes and policies for each address since they all come from the same provider and portfolio protection contract.

We work with insurance specialists who can help you get exactly the type of cover needed for your particular circumstances and find you the best possible rate.

Ask us a question

We can help! We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in Buy-To-Let mortgages. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

FCA Disclaimer

*Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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