Portfolio Mortgages
What are Portfolio Mortgages?
Portfolio mortgages are products designed for professional buy to let landlords with multiple investment properties. There is a difference between a professional landlord and an experienced landlord. Typically, a professional landlord has 4 or more buy to let properties, a landlord that has had one buy to let property for at least 1 year is considered by some lenders as an experienced landlord. These mortgages are designed to be four or more buy to let properties under one mortgage.
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Selling or Refinancing one or more of the Properties in the Portfolio
If a landlord has a portfolio mortgage, it can restrict them from selling or refinancing any of the properties in that portfolio. If any of the properties are sold or refinanced with another lender, then the remaining portfolio would need to be re-valued. The lender needs to protect their position and make sure they are not overexposed.
What do mortgage affordability checks involve?
When applying for mortgages, lenders stress test all of a landlord portfolio, the calculation used depends on your tax status or if the properties are held in a limited company. This calculation can be complex, but is necessary to assess.
If you do have four or more buy to let properties with a mortgage, you’ll be subject to the new portfolio mortgage underwriting.
As part of the application process, lenders will need to make sure that you are in a stable financial position and can make the monthly mortgage commitment. Different lenders have interpreted the rules in different ways and criteria can vary between lenders, but they will consider all of the portfolio and are likely to consider:
- Your experience as a landlord
- Details of your mortgages on all of your buy-to-let properties
- Your assets and liabilities
- Tax status
- Your income both from property and other sources
- Self Assessments/accounts
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