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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.

[This blog was updated on: 02 January 2018]

In 2016 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.

Borrowing up to 6 times your income
Yes, that's right! One of the leading buy to let lenders currently has a very limited edition range of home-owner/buyer mortgages on which it will lend up to six times your income. And that can be from rent - even if you have an incredibly large portfolio. The rates are pretty impressive too. Read my colleagues blog to find out more or give me a call on 01732 471602 to discuss in greater detail.

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!!!

Next steps
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.

Beckie Pepperrell has left Mortgages for Business for pastures new. For more information or for any questions relating to this blog, please contact the Residential Team on 0345 345 6788, where one of our consultant mortgage brokers will be happy to assist. 

[Blog updated: 02 January 2018]

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