Dealing with large Buy to Let portfolio size issues and different lending criteria.
If you are reading this article on “Buy to Let portfolio size” you are undoubtedly you are feeling frustrated right now. Below I provide an insight to hopefully bring a smile back onto your face.
Just so you know this article forms part of my “my properties are stopping me getting a mortgage series” and other topics include:
- Rental coverage
- Commercial usage
- Past Habits
Size of existing portfolio
You’d be fooled by thinking the larger your portfolio the more standard buy-to-let Mortgage Lenders would be willing to lend. After, all experience and cross subsidy of tenancy voids is everything right?
Well wrong.
Even before the Prudential Regulatory Authority got their hands dirty to slow the private rental sector the vanilla buy-to-let lenders often shied away from welcoming large landlords.
In the defence of building societies, there is probably a tangible explanation as their ethos is communal saving is returned by way of mortgages to aid homeownership. Okay, through convenient choice they deviate from this mantra by operating separate brands from their membership, that is purely buy-to-let focused, but this core belief still resonates in their DNA.
To provide examples of the buffers you can hit with three of the most prevalent vanilla buy-to-let brands who have the following rulings:
Buy to Let portfolio size lender criteria
Building society brand 1: The Mortgage Works
Standard position 75% loan to value
Once the maximum combined borrowing with their Group* reaches £1m this drops to 65%LTV.
Over four mortgage properties then the underwriting becomes onerous.
Over eleven mortgaged properties higher rates apply.
Building society brand 2: Godiva
Standard position 75% loan to value
Over four mortgage properties then the underwriting becomes onerous this drops to 65%LTV.
Maximum number of properties with them is five
Maximum number of properties with any lender is ten.
Major bank brand 3: BM Solutions
Standard position 75% loan to value
Over four mortgage properties then the underwriting becomes onerous.
Maximum combined borrowing with their Group* is £2m.
Maximum number of properties with the Group* is three.
*By the Group I mean the main lender and any other subsidiaries of brands they operate be it buy-to-lets or residential.
To restate these are historically main players in the buy-to-let market and if you are a professional landlord I wouldn’t mind betting you have used at least one of them in the past.
So where do you go from here? Well, it’s not all “doom and gloom” and in fact far from it. Their ‘commercial division’ counterparts have different watchdogs and licensing, and are likely to take a more liberal approach as will the growing band of ‘specialist centralised lenders’. In fact, there are mortgage lenders that have “no maximum” number of properties or “loan size” and some that operate outside the PRA rules so have much more autonomy.
If you are a landlord with a Buy to Let portfolio size of more than 4 or more propereties I suggest you consider enlisting the services of a professional Mortgage Broker, such as Niche Advice, who have the expertise, and importantly the agencies to access the best options for you.
Talk to us we really do know what we are talking about.
