Buy-to-Let Portfolio Mortgages Explained

You could be eligible for a portfolio mortgage if you’re a landlord with at least four mortgaged buy-to-let properties. In this article, we’ll take you through exactly what that entails, which lenders offer mortgages to portfolio landlords, and how you can get started making an application.

How many buy-to-let mortgages can you have?

The number of buy-to-let mortgages an individual can have is not strictly limited; lenders assess your ability to afford multiple mortgages based on your income, credit history, existing debts, rental profitability, and the loan-to-value ratio of each property. Regulatory changes and economic conditions also matter.

To be technically classed as a portfolio landlord, you will need a minimum of four properties with mortgages.

Is there a maximum number of properties allowed?

There isn’t a set maximum that applies across the market – lenders have their criteria, and many look at applications on a case-by-case basis with no formal maximum.

You should check the conditions carefully, as some lenders will apply caps on the total number of mortgaged properties while others will look simply at the total number of properties you own, whether or not they have remaining finance.

Here are two examples of the limits mortgage lenders set on the maximum number of properties in a buy-to-let portfolio:

• Virgin Money: Will accept a maximum of 5 buy-to-let properties and up to £3 million of finance for portfolio landlords, with no more than 10 mortgaged properties in the whole portfolio, spread across all lenders.
• The Monmouthshire Building Society: Will accept up to ten properties, providing you have at least 2 years’ experience as a landlord and don’t own more than 20 properties in total, including unencumbered properties.

What is a buy-to-let portfolio mortgage?

Rather than being a specific product, a buy-to-let portfolio mortgage is a specific term of reference used by lenders for landlords who have at least four mortgages on buy-to-let/rental properties and are now seeking further borrowing to expand this number.

Rather than having your mortgage borrowing spread across multiple lenders, a portfolio mortgage allows you to combine some or all of your buy-to-let lending under one umbrella, which means you could use the equity in one property to cover the deposit required to buy another. This type of lending is also referred to as ‘cross-charging’.

Some lenders will often be more flexible with portfolio landlords, allowing you to include less standard property types such as holiday lets and HMOs.

How to get a buy-to-let portfolio mortgage

If you want a portfolio mortgage to cover multiple buy-to-let properties, it pays to seek professional advice. Make an enquiry and we’ll match you with a broker who specialises in buy-to-let portfolio mortgages.

Your advisor will walk you through the following steps to full application:

Gather details of your existing mortgages

Your portfolio mortgage lender will want to see the details of all your existing buy-to-let mortgages, including rates, remaining terms, and balances. This will help them calculate your portfolio LTV and suitability.

Put together your business plan.

This should include details of current and projected rental income to help your lender assess your interest cover ratio (ICR). Your ICR is the amount of rental income you expect to get as a percentage of your mortgage interest payments. Lenders want this to be between around 125 – 145% to be sure you can afford your repayments.

Identify to best-fit lenders

There will be many factors to consider here, including costs, terms, and flexibility. Your broker’s job is to identify the best deals for you and help you choose the right lender.

Advantages and disadvantages to portfolio mortgages

You’re not obliged to have a portfolio mortgage just because you have four or more rental properties, so talk through the pros and cons with your broker before you take the plunge.

Advantages

One payment and one lender: The main benefit of a portfolio mortgage is that you make just one payment a month to one lender. The more properties you own, the harder it can be to keep track of your mortgage repayments, so having them all in one place is a huge time efficiency.

Flexibility: When all of your mortgages are grouped, you have the flexibility to pool equity and boost your borrowing power. Poorer-performing properties can also be offset against more successful ones, making you a better proposition for further lending.

Tax savings: Opting for a portfolio mortgage may also offer tax efficiencies, saving you money and making it more cost-effective to reinvest. We can help you calculate potential savings.

Disadvantages

Fewer lenders to choose from: Not as many lenders offer portfolio mortgages, meaning you have fewer choices.

Higher rates and fees: Portfolio mortgages may have higher rates. This is normally offset by the tax savings, but it’s worth doing the sums.

All your eggs in one basket: While there are benefits to having one lender and one payment for all your loans, this can mean you run into trouble if you have an issue with that lender or they change their terms unfavourably.

Inflexibility: If you want to sell one property from the portfolio, it may impact your overall LTV, and you may find yourself restricted in what you can do.

Which lenders offer multiple-property mortgages?

There is a good range of both high street banks and more specialist lenders who offer buy-to-let portfolio mortgages, but terms and criteria can vary significantly.

Current buy-to-let portfolio mortgage providers include:

• Barclays
• Vida Homeloans 
• Newbury Building Society
• The Monmouthshire Building Society
• Virgin Money

It is important to remember that approaching any of the above lenders directly is not recommended. Applying through a broker who specialises in portfolio mortgages will give you access to a much wider range of rates and deals, as well as bespoke advice, to boost your chances of securing the right mortgage.

Insurance for portfolio landlords

If you manage your mortgages under one umbrella, it can make sense to do the same with your buildings and contents insurance. Portfolio buy-to-let insurance allows you to do just that, combining individual policies into one covering multiple properties.

There are often economies of scale to be had with portfolio insurance, and you can save even more money by using a specialist portfolio insurance broker to help you find the best deal.

Head over to our sister website, Online Money Advisor, for further information about landlord insurance.

Get matched with buy-to-let mortgage broker

As a portfolio landlord, you’ll want to keep your costs to a minimum, so working with a specialist buy-to-let broker and ensuring you have access to the whole portfolio mortgage market is key. While we can give you examples of some of the offers available, a broker will have relationships with lenders you may otherwise not be able to find.

Give us a call on 0330 818 7026 or make an online enquiry, and we’ll gather some details about your situation so that we can quickly match you with the right broker. Our broker matching service is free of charge, and without obligation, so you’ve got nothing to lose.