portfolio buy to let mortgages

What is portfolio buy-to-let mortgages?

Simon Banks

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Everything you need to know about portfolio buy-to-let mortgages?

Some landlords are happy with one buy-to-let property, while others have a couple that they rent out. Then there are those classed as portfolio landlords because they own several properties. As a portfolio landlord, you will need a particular type of mortgage for your investments. This is known as a portfolio buy-to-let mortgage, and in this guide we’re detailing everything you need to know about how to get one for your buy-to-lets. 

What is a portfolio buy-to-let mortgage?

A portfolio buy-to-let mortgage is specific for landlords who have multiple investment properties. Instead of mortgaging their investments separately, they take out a single mortgage to cover the entire portfolio. As a result, they hold their buy-to-let mortgages under one umbrella.

Instead of having several mortgage providers for each property, the portfolio is managed by just one lender. You also have one single monthly payment and statement, which makes it easier to keep track of everything. 

How many rental properties does a landlord need to be a portfolio owner?

Generally speaking, you are considered a portfolio landlord when you have four or more properties. However, things can get a little complicated, as the portfolio status revolves around the number of mortgaged properties. 

To illustrate, if you own five properties, but two of them don’t have a mortgage, you won’t be considered a portfolio landlord. Likewise, if you own three mortgaged properties, you also don’t have a portfolio. It needs to be at least four mortgaged properties.

Once you have four or more buy-to-let properties with a mortgage, you will be subject to portfolio underwriting checks, also known as portfolio stress testing. Lenders need to ensure that you’re in a robust financial position, although the criteria depend on the requirements of the lender you’re applying with. 

As a general rule of thumb, you can expect the following factors to be considered:

  • Your landlord experience
  • Previous and future cash flow from your portfolio
  • Income from the properties and other sources, such as your job
  • Details of current mortgages on your buy-to-let properties

Again, criteria changes depending on the lender, and it’s best to ask them for a breakdown of their requirements before applying. If you’re looking for a buy-to-let mortgage through a broker, they will take your details and give you options based on the information provided. 

Who are the portfolio buy-to-let lenders?

There are several portfolio buy-to-let lenders operating on the market, including Molo. Twenty-eight per cent of landlords have between five and 10 properties and make up a significant portion of the market. A further 42% own between two and four properties, which showcases landlords’ ambition to build their portfolio. 

Therefore, it’s important they have options for converting their properties into a portfolio buy-to-let mortgage. Molo’s portfolio eligibility requirements include:

  • Maximum of 10 mortgaged buy-to-lets across all applicants, including the security
  • No limit to the number of unencumbered properties 
  • Full BTL product range applies, including 5-year-fixed rates
  • Available to individual and limited company borrowers

And our lending criteria includes:

  • Maximum background portfolio LTV of 75%
  • Background portfolio interest cover requirement is 100% stressed at 5.5%
  • Details of assets and liabilities and cash flow are required at the underwriter’s discretion.  

Final words: portfolio buy-to-let

Having a portfolio mortgage simplifies everything, as you only have one monthly payment with one lender. So if you own four or more properties, then you’ll be keen to find the right portfolio buy-to-let mortgage for your needs. And Molo could just be the right option. 

Check out our portfolio buy-to-let mortgages

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