CALL USWhat does it mean to be classed as a portfolio landlord?
From the 30th of September 2017 the Prudential Regulation Authority (PRA) changed the way lenders are expected to underwrite buy to let mortgage applications from portfolio landlords. The PRA defines a portfolio landlord as “borrowers with four or more distinct mortgaged buy-to-let properties, either together or separately, in aggregate.”
So, if you are a portfolio landlord what will these changes mean for you?
Rather than just consider the merits of the application in front of them lenders will now need to make sure you are not over-exposed and as such will look at your complete buy to let portfolio when making their decision.
As before different lenders will have slightly different underwriting criteria but in general they will now be looking at:
- Your property investment experience
- Full details of your property portfolio
- The total amount of your mortgage borrowing across all properties
- Your assets and liabilities, including tax liability
- The merits of any new lending in the context of your existing buy to let portfolio together with your business plan
- Historical and future expected cash flow from your portfolio
- Your income both from property and elsewhere
You should expect to be asked for more paperwork than previously including 3 months bank statements for all current accounts showing rental payments, submitted tax returns and income and expenditure statements for your portfolio.
What will the impact be on interest rates?
None of the above is a reason to panic, the rates available to you will be comparable to clients with 4 or less properties. However, there may be a reduced number of lenders who are available to you. As professional advisors we will guide you through the new requirements to ensure your application has the best chance of success.
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Summary
Whilst lenders have changed the way they underwrite mortgage applications for portfolio landlords, working with a professional broker such as Bennison Brown, who have a thorough understanding of this market, will help you navigate through the new requirements.
Not all Buy to Let Mortgages are regulated by the Financial Conduct Authority
