What is a Portfolio Landlord?
A portfolio landlord is a classification coined by the Prudential Regulation Authority (PRA), that state any landlord who owns four or more mortgaged properties, either in their private name, jointly or within a limited company should be viewed as a portfolio landlord.
I have three buy-to-let properties, and I am purchasing a new one. Am I a portfolio landlord?
If your current three properties are all mortgaged and you require a mortgage for the new property, then you will be classed as a portfolio landlord for the new mortgage application.
Do unencumbered properties count?
The quick answer is no, any unencumbered property held within your portfolio is disregarded for the purpose of the above. Therefore, if you own six buy-to-let properties but only two have a mortgage on them, then you are not a portfolio landlord in the eyes of the PRA.
Is it harder to get a buy-to-let mortgage as a portfolio landlord?
Yes, there are additional underwriting checks to go through and additional documentation to provide. In addition, some more mainstream lenders will place restrictions on the portfolio size, the overall loan-to-value, or the maximum level of debt. These requirements will differ from lender to lender and typically it will be a specialist lender that will accommodate the larger portfolio landlord.
What are the rules for portfolio landlords?
The Prudential Regulation Authority (PRA) 2016 introduced guidance to lenders in connection with portfolio landlords. These included the need for business plans, cash flow forecasts, and a better understanding of the background portfolio. This also included stress testing the existing portfolio against future interest rate rises.
Is there a maximum portfolio size?
The maximum number of properties in a landlord’s portfolio will vary between lenders; typically, this would be ten. However, there are more specialist lenders that can accommodate larger portfolios, including mixed portfolios. Remember, it’s only mortgaged properties that count but will include, solely owner, jointly owned, and those within a limited company.
Will bad credit affect my mortgage application?
Whilst it’s possible to get a portfolio landlord mortgage with bad credit, undoubtedly this would be with a specialist lender, and the number of lenders will be reduced. The starting point of any mortgage application is understanding your credit report. At Pinpoint Finance, we would always ask you to supply your credit file, so we can fully understand what the lender can see. The best way we can do that for you is to see your Checkmyfile credit report.
Should I use a mortgage broker for a portfolio landlord mortgage application?
A mortgage broker can help you save time, money, and significant stress with a portfolio mortgage application. They can help you get a better understanding of each lender’s criteria, and help you with the paperwork and additional documentation that will be required; that’s what Pinpoint Finance does. If you fall within the definition of a portfolio landlord, we will always recommend using a mortgage broker.
Pinpoint Finance is a specialist in portfolio buy-to-let mortgages. We know every landlord’s portfolio is unique, we have extensive market knowledge when it comes to understanding your opinions and we will assist you with every step of your application.
