Buy-To-Let Portfolio Mortgages Explained

Juggling four mortgages with four different lenders is no small task. You’re likely keeping track of four different rules, payments, and deadlines.

And chances are, right now you’re looking for a way to simplify things.

The good news is you can combine your buy-to-let mortgages under one roof.

How? What are the things to consider? And what do I need to start?

This guide answers all your questions–we’ve covered all you need to know about buy-to-let portfolio mortgages.

What Defines a Portfolio Landlord in the UK?

If you own four or more mortgaged rental properties, you’re considered a portfolio landlord. 

This applies whether you own them yourself, jointly with someone else, or through a company.

While not mandatory, these portfolio mortgages offer benefits. They make dealing with lenders easier and streamline your finances, freeing up time to grow your investments.

What Is A Buy To Let Portfolio Mortgage?

A buy-to-let portfolio mortgage lets you group several rental properties under one mortgage deal. Unlike standard buy-to-let mortgages, this option simplifies managing your investments. 

With this mortgage, you only deal with one lender and make one monthly payment, which keeps things simple.

Additionally, it’s worth noting that the Financial Conduct Authority does not regulate some forms of these mortgages.

How Does It Work?

Similar to regular buy-to-let mortgages, these are secured against your properties and often involve only interest payments each month. 

The key difference? This mortgage treats all your properties as one big group.

Here’s the benefit: One lender handles everything, with only one monthly payment for all your properties. This is much simpler than having separate mortgages for each one.

But, if you already have mortgages on your properties, you can consider switching them to a portfolio mortgage when the initial fixed deal ends to avoid higher interest rates.

Portfolio mortgages can work for various properties. This includes:

• Regular rentals
• Business-owned properties
• Auction buys
• Student Housing
• Multiple flats in one building
• Shared houses

Even a mix of these property types could qualify for a portfolio mortgage.

What Are The Types of Buy-To-Let Portfolio Mortgages?

There are a few main types of buy-to-let portfolio mortgages you might look into:

• Individual Property Mortgages – Ideal for landlords focusing on building a portfolio one property at a time. It offers flexibility for each investment.
• Limited Company Mortgages – Suited for landlords operating through a limited company structure. It can offer tax efficiencies and financial advantages.
• Mixed Property Type Mortgages – For landlords with diverse portfolios, including residential, commercial, or HMOs (Houses in Multiple Occupation). It accommodates varied investment strategies.

Who Qualifies for A Buy To Let Portfolio Mortgage?

Here’s what you need to know to be eligible:

• Number of Properties. Typically, owning four or more rental properties can qualify you as a portfolio landlord.
• Income Levels. Your income may be assessed to ensure you can cover mortgage payments, especially during rental voids.
• Rental Yield. Lenders look at the profitability of your properties. A higher rental yield can improve your eligibility.
• Credit History. A solid credit history demonstrates financial stability, making you a more attractive borrower to lenders.

Is It A Good Idea?

It boils down to your situation and what’s important for you. Let’s look at the pros and cons:

Pros

• Easier management with a single monthly payment for all your properties.
• Potential for better interest rates, which can reduce overall costs.
• Increased borrowing power makes it easier to expand your property portfolio.
• Flexibility to borrow against pooled equity across multiple properties.
• Possible tax savings, making reinvestment in your portfolio more affordable.

Cons

• Limited lender options since not all lenders offer portfolio mortgages.
• Higher rates and fees compared to individual property mortgages.
• Risk of issues across all properties if something goes wrong with the single lender.
• Selling one property could complicate your mortgage terms and affect loan-to-value ratios.

Choosing a buy-to-let portfolio mortgage really depends on what you’re ready to handle. Talking it over with a broker can help you see if the pros outweigh the cons of your situation.

How Many Buy-To-Let Mortgages Can I Have?

There isn’t a universal cap on the number of buy-to-let mortgages you can hold; it varies with each lender’s specific rules.

How many you can get depends on the lender’s requirements and your financial health. 

Lenders check your total income. This includes your rental income, and how reliable you are at keeping up with payments.

Furthermore, some lenders may set a strict limit on the number of mortgages you can have. Some may focus on the total number of your properties, regardless of whether they’re fully paid off or still have mortgages.

So, it’s best to always read the lender’s terms carefully, as rules can differ significantly. 

Who Offers A Buy-To-Let Portfolio Mortgage?

Here’s a quick list, but remember, it’s not everything out there:

• Virgin Money
• Monmouthshire Building Society
• The Mortgage Works (part of Nationwide Building Society)
• West One Loans
• Leeds Building Society
• Barclays
• Vida Homeloans
• Newbury Building Society
• Yorkshire Building Society

Make sure to shop around for the best deal. Look at their interest rates, what they offer, and how they can help your portfolio grow.

And, a tip: Don’t just walk into these banks and ask for a mortgage. 

It’s smarter to chat with a broker who’s clued up on buy-to-let portfolios. They can snag you better deals and give advice that’s right for you.

What Are The Interest Rates?

Interest rates for portfolio buy-to-let mortgages can vary a lot, but generally, they might range from around 3% to 8%. But, the exact rate you’ll get depends on your situation.

If lenders think you’re a risky applicant, they might offer you higher rates. Overall market conditions can also affect your rates at the time you apply. 

It’s always a good idea to shop around or talk to a broker to find the best deal for you.

To secure the best rates, maintain a strong credit score, demonstrate reliable rental income, and consider using a mortgage broker for access to exclusive deals.

Can I Get A Buy-To-Let Portfolio Mortgage with Bad Credit?

Yes, it’s possible to consider a buy-to-let portfolio mortgage even with bad credit, but it can be more challenging. 

Your choice of lenders may be more limited, and you might face higher interest rates. 

Lenders will carefully assess your credit history, including any past issues, when they occurred, and how you’ve managed your finances since.

If your credit needs work, try improving it before applying. This could involve paying off debts, fixing mistakes on your credit report, or showing better money management over time.

A specialist broker who understands bad credit can help. They can suggest lenders who might be more open to your situation. 

But it’s important to know there’s no guarantee you’ll get a mortgage. It all depends on your finances, how well you match the lender’s criteria, and what options are available.

If traditional lenders don’t work out, private lenders could be another option, though they usually charge more.

The Bottom Line:  How To Get Buy-To-Let Portfolio Mortgages?

A buy-to-let portfolio mortgage allows you to consolidate mortgages from various lenders into one. This means you only deal with a single lender and can use the equity in one property as a deposit for another.

To get one, you’ll need to gather ALL important documents, such as information on your current mortgages and your business plan.

Your rental income should ideally cover your mortgage payments by at least 125%. Some lenders might require more.

Look for lenders that match your investment aims and situation. A mortgage broker can assist with this process, offering guidance from beginning to end, which makes everything simpler and less daunting.

To begin, just get in touch. We’ll connect you with a trusted buy-to-let mortgage broker to find the best deals available.