Home-owner mortgages for portfolio landlords

Not all mortgage lenders accept applications from landlords with four or more mortgaged buy to let properties, irrespective of whether they receive an income from the rents. So what are the options? Beckie Pepperrell explains.

Earlier this year the Prudential Regulation Authority defined a “portfolio landlord” as one who has four or more mortgaged properties and because of a perceived higher risk factor, some residential mortgage lenders will not lend to this class of borrower. But, there are some which will – on the following terms…

Rent as only income
Only a handful of lenders will accept property profits as stated on the landlord’s tax return as the sole source of income when assessing affordability. And if you have more than 25 properties in your portfolio producing £100k of profit, your choice of lender is further reduced

Rent and a day job as income
When calculating affordability, some lenders will not take the profit from the rental on the tax return. This means that the landlord must have another source of income, i.e. a day job as well as being a landlord to meet the income criteria.

Assessing affordability
Some lenders will “ignore” the buy to let mortgage payments when assessing affordability as long as they are self-financing; however, some will not. Instead they factor in the gross rent and mortgage payment which can either work for or against the landlord – it all depends on your individual circumstances.

Landlords operating via limited companies
Some residential mortgage lenders will only lend to a portfolio landlord who runs his/her business through a limited company.

For example, the Halifax will not lend to a landlord with personal income from land and/or property on his/tax return but if it’s the income is put through a limited company and paid to the landlord via salary and dividends, then that’s fine, although I’ve absolutely no idea why!!!

The point I’m trying to make, is that there are solutions out there for professional (ahem, portfolio) landlords but it can be a bit of a minefield, so do get in touch if you need help finding the safe route through.

I can be contacted direct on 01732 471602 or call the main enquiry line to speak to any of our qualified mortgage brokers.

 

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