What Is The Maximum Buy-To-Let Mortgage I Can Have?

Nikka Sulton

What Is The Maximum Buy-To-Let Mortgage I Can Have?

If you own four or more mortgaged buy-to-let properties, you might qualify for a portfolio mortgage. This piece outlines the details, discusses lenders catering to portfolio landlords, and provides guidance on initiating the application process.

How many buy-to-let mortgages can you have?

The number of buy-to-let mortgages a person can manage is not strictly capped; it hinges on factors like income, credit history, existing debts, rental returns, and the loan-to-value ratio of each property. Lenders also consider regulatory changes and prevailing economic conditions when assessing eligibility for multiple mortgages.

Formally obtaining the status of a portfolio landlord requires a minimum of four properties with mortgages. This distinction underscores the need for careful financial planning and evaluation of various factors to ensure the feasibility and sustainability of managing multiple properties within the context of buy-to-let investments.

Is there a maximum number of properties allowed?

There is no universal maximum limit for the number of buy-to-let properties one can have, as lenders establish their own criteria, often assessing applications individually without a predefined maximum. It is essential to scrutinize the conditions, as some lenders may impose caps on the total number of mortgaged properties, while others consider the overall property ownership, regardless of existing financing.

To illustrate, Virgin Money permits a maximum of 5 buy-to-let properties, allowing up to £3 million in finance for portfolio landlords. However, the total number of mortgaged properties in the entire portfolio, across all lenders, should not exceed 10. On the other hand, the Monmouthshire Building Society accepts up to ten properties, requiring a minimum of 2 years’ landlord experience, and stipulating that the total property ownership, including unencumbered properties, should not surpass 20.

What is a buy-to-let portfolio mortgage?

A buy-to-let portfolio mortgage is not a specific product but a term used by lenders for landlords with at least four mortgages on rental properties, seeking additional borrowing. Instead of having mortgages with multiple lenders, it consolidates buy-to-let lending, enabling the use of one property’s equity for another’s deposit—a practice known as ‘cross-charging’. This approach provides flexibility for portfolio landlords, accommodating less standard property types like holiday lets and HMOs.

How to get a buy-to-let portfolio mortgage

If you’re considering a portfolio mortgage for multiple buy-to-let properties, it’s wise to seek professional advice. Submit an inquiry, and we’ll connect you with a broker specializing in buy-to-let portfolio mortgages. Your advisor will guide you through the necessary steps leading to a complete application.

Gather details of your existing mortgages

Your portfolio mortgage lender will require information on all your current buy-to-let mortgages, including rates, remaining terms, and balances. Providing these details allows them to assess your portfolio Loan-to-Value (LTV) and determine your eligibility.

Put together your business plan

Include information on your current and anticipated rental income to assist your lender in evaluating your Interest Cover Ratio (ICR). The ICR is the expected rental income percentage compared to your mortgage interest payments. Lenders typically look for an ICR between approximately 125% and 145% to ensure your ability to cover repayments.

Identify to best fit lenders

Consider various factors like costs, terms, and flexibility when choosing a buy-to-let portfolio mortgage. Your broker will assist in identifying the best deals and selecting the most suitable lender for your needs.

Advantages and disadvantages to portfolio mortgages

Owning four or more rental properties doesn’t necessitate a portfolio mortgage, so discuss its pros and cons with your broker beforehand.

Advantages:

Simplified Payments: With a portfolio mortgage, you make a single monthly payment to one lender, streamlining management for multiple properties.
Flexibility: Grouping mortgages allows flexibility in pooling equity and enhancing borrowing power. Offset underperforming properties against successful ones.
Tax Savings: Opting for a portfolio mortgage may offer tax efficiencies, potentially saving money and enhancing cost-effectiveness.

Disadvantages:

Limited Lender Options: Portfolio mortgages may have fewer lender choices, reducing your options.
Higher Rates and Fees: While tax savings may offset higher rates, it’s essential to evaluate the overall financial impact.
Concentration Risk: Relying on one lender and payment method poses a risk if issues arise or unfavorable terms are introduced.
Inflexibility: Selling a property from the portfolio can affect overall Loan-to-Value (LTV) and impose restrictions on your actions.