This is one of the most commonly asked questions we get from landlords who are looking to expand their portfolios, as Jeni Browne explains
The very short answer is, that there is no limit. We have some clients with extremely large property portfolios, who have literally hundreds of buy to let mortgages. However, that’s not the whole story…
Lenders either limit the number of buy to let mortgages you have with them (to say, three) or they limit the total amount of borrowing you can have with them (to say, £5m).
Exposure limits with other lenders
However, some lenders will also limit the number of buy to let mortgages you can have with other lenders (often referred to as “in the background”). Again, this can vary, often from 4-10.
And there are many lenders who do not mind how many buy to let mortgages you have with other lenders.
But it doesn’t end there…
If you are classed as a Portfolio Landlord, i.e. you have four or more buy to let mortgages, lenders are obliged to assess both:
- The buy to let mortgage application you are making
That could be for a purchase, a like-for-like remortgage or a remortgage and capital raise.
- Your entire portfolio and your total borrowing
Lenders prefer the leverage to be between 65% and 75% loan to value of the entire portfolio. The rental income from the portfolio needs to cover all the mortgage interest with a surplus. The way lenders calculate this does vary – some want the whole thing to wash at 125% assuming a rate of 5.5%, some 145% at 5.5% and others use a bespoke calculation. Some lenders will accept your own portfolio spreadsheet, others prefer a particular format – we have devised one which is acceptable to all lenders which you can use.
Download the Buy to Let Portfolio Spreadsheet
In addition to this some lenders may ask for a cashflow forecast and/or a business plan – these are nothing to be feared and we are more than happy to help you put these into the correct format.
If you have fewer than four mortgaged buy to let properties, lenders will probably ask about your background properties, but they will not form part of their underwriting.
I own my houses outright. Can I remortgage?
If you own lots of buy to let properties outright, say four, or 10 or 100+ – you will not be classed as a portfolio landlord until four of your properties are mortgaged.
As usual, if you want to talk through the current buy to let mortgage options for your circumstances, please do not hesitate to pick up the phone. My direct line is 01732 471647 or you can speak to any of our qualified mortgage advisers on 0345 345 6788. We look forward to helping you.
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20th March 2018