Portfolio mortgages

Portfolio mortgage eligibility and criteria

Portfolio mortgage eligibility rests on the portfolio as a whole as much as on any single property. Lenders read the portfolio schedule, the total rental income against their stress test, the aggregate loan to value across every mortgaged property, and the landlord's experience. A landlord with four or more mortgaged buy to let properties is treated as a portfolio landlord under the Prudential Regulation Authority rules, which means the background portfolio is assessed on every new application. Lenders set their own criteria on the maximum portfolio size they will fund, the mix of property types they accept, the loan to value they allow across the portfolio, and whether they lend to individuals, a limited company or an SPV. Some cap the number of properties or the total exposure to one borrower, so a large portfolio is often spread across several lenders by design. We package the portfolio schedule, the rental income, the business plan and the ownership structure so lenders can underwrite the application cleanly. All criteria are indicative, vary by lender, borrower and property, and are not an offer of finance.

How does a portfolio mortgage work?

A portfolio mortgage works by pricing and sizing each buy to let mortgage on the rent the property produces while assessing the whole portfolio in the background. The loan on each property is sized on the interest cover ratio the rent gives against the lender's stress rate, indicatively up to 75 to 80 percent loan to value, so the deposit on each purchase is indicatively 20 to 25 percent, with higher yielding property supporting more borrowing. Where a single facility holds several properties together, the lender looks at the blended loan to value and the combined rental income across the account, which can let a stronger property carry a weaker one. Coordinating the portfolio also lets a landlord release equity from properties that have grown in value and recycle it into the next purchase, a portfolio remortgage that raises capital while keeping the leverage sensible. We model the interest cover across the portfolio on the buy to let mortgage calculator before approaching lenders, so each application goes to market at a level that will fund. The figures are illustrative, vary by lender and property, and are not an offer of finance.

Portfolio mortgage rates and costs

Portfolio mortgage rates track the wider buy to let market and depend on the loan to value, the interest cover ratio the rent supports, the property type and whether the borrower is an individual or a limited company. Each mortgage carries its own costs: a lender arrangement fee, often a percentage of the loan on specialist products, a valuation fee per property, and legal costs. Rates are commonly fixed over two or five years, and an early repayment charge applies within the fixed period, so the terms across a portfolio are best staggered rather than all maturing together. Coordinating the portfolio keeps the blended cost sensible and avoids a cluster of remortgages falling due at once. We disclose our broker fee in writing and quote current indicative rate ranges and the all in cost across the portfolio rather than headline figures, and they are not an offer of finance.

What are the benefits of a portfolio mortgage?

The benefit of arranging a portfolio mortgage is that the portfolio is managed as one financial position rather than a scatter of separate loans. That makes it easier to release capital from properties that have grown in value, to keep the aggregate loan to value where a landlord wants it, to stagger fixed rate maturities so remortgages do not all fall due together, and to place the whole portfolio with lenders whose criteria suit it. It also gives a portfolio landlord a single view of leverage and rental income to plan the next purchase. The trade off is that lenders scrutinise the whole portfolio on every application, so a weak property or a stretched loan to value can affect the next deal, which is why structure matters. Whether to hold personally or through a limited company is a decision for a landlord and their tax adviser; we do not give tax advice. A portfolio mortgage broker adds most here, holding the specialist lender relationships and knowing which desk will take the whole portfolio and on what terms, rather than a landlord approaching lenders one property at a time. We arrange portfolio mortgages, portfolio landlord mortgages and limited company buy to let alongside HMO and semi commercial finance, and where a case would be a regulated mortgage contract or a consumer buy to let we refer it to an authorised firm.