Portfolio Mortgages

Morgan Stewart talks all about Portfolio Mortgages. 

What is a Portfolio Mortgage and why would a property require a portfolio loan?

A portfolio mortgage is more than one property on one loan agreement. So if you’ve got multiple properties, you can have one loan with one lender, across every single property.

How does a Portfolio Lender work?

They work exactly the same as if you were just getting a Buy to Let mortgage on a single property, the loaned value is assessed by the rent generated. 

How hard is it to get a portfolio loan?

It all depends on the lender, but it’s reserved for Commercial Lenders. So the big commercial banks offer them and it’s a very similar process to a Buy to Let loan, there are simply more due diligence surveys to be conducted, because it’s not just one security but multiple securities. 

How many properties should a landlord have in a portfolio?

A portfolio landlord is defined as someone who’s got four or more mortgaged Buy to Let properties at a  minimum.

What are the advantages and disadvantages of a Portfolio Mortgage?

The advantages are that you only deal with one lender, so it can be simpler managing the loan through one point of contact.  

There are quite a few disadvantages, first of all, you give all your properties over to one lender, so that one lender has a disproportionate amount of power over your portfolio. There can be onerous terms written into Portfolio Mortgages as well. For example, where people had multiple properties from one lender, they were all consolidated into one loan and and then they had the right to consolidate, which basically means that if your overall borrowing is higher than the bank would wish, if you were to sell a property which had good equity in it, the lender could take the money from the sale of that property to pay the loan down on the rest of the portfolio. 

How do you go about applying for a Portfolio Mortgage?

If a Portfolio Mortgage is the right thing for you, we, as Mortgage Brokers, can find you the best lender with the best terms and put in all the legwork. There is quite a lot of due diligence to complete, and we write the report and present it to the lender on the client’s behalf.

A Portfolio Mortgage is not right for everybody. If you want a good rate from a high street bank you’re willing to offer good security on a repayment mortgage, then it might be right for you. If you grow your portfolio and want to keep things separate, perhaps it’s not for you. It all depends on personal circumstances and where you are on your investment journey.