Buy-to-Let Portfolio Mortgages

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

By following this guide, you’ll better understand 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 consolidate all their mortgages under one loan umbrella.

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

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

Some lenders will only allow up to 20 properties overall, and a smaller number will be 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. The overall fee structure should save you money in the long run, and 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.

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, you can take a few simple steps 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 want to see a landlord’s business plan, profit and loss accounts, and 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 your credit reports before you start.

This will give you the chance to prepare for any hurdles you might face, 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, you should speak with a mortgage broker with experience in these types of home loans.

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

If you contact us, we can arrange for a broker with experience helping landlords get portfolio mortgages 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 higher amounts.

Sometimes, lenders may stipulate a maximum amount to borrow per property. 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 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 should be between 125% and 145% of 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 to ensure 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:

Do High Street lenders offer these mortgages?

Yes, there are a number that offer this type of mortgage, but while 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:

This is why, rather than approaching lenders directly, you can save yourself a lot of time and effort by 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 requirements.

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, considering all the factors outlined above before reaching a decision and deciding on 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 and 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. Under a limited company structure, you’d be subject only to corporation tax on the rental profits.

It could be worth taking advice on this from a professional tax advisor.