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Getting the best mortgage for professional landlords

This article is part of
Guide to Multiple Buy-to-let

When sourcing the best buy-to-let deal intermediaries should use relevant sourcing systems to understand what deals are available and take criteria and quality assessment into account, according to Brad Fordham, managing director of Santander for Intermediaries.

When scanning the market for the best multiple buy-to-let mortgage deal for your client, Ray Boulger, senior technical manager for John Charcol, says it is vital you understand lending criteria and not simply search for cheapest rate.

He says: “Some lenders have restrictions of the total of money outstanding on the amount of lending they will do. Other lenders have restrictions on the number of properties.

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“Some lenders have restrictions of a combination of the two (amount of money and number of properties). Some have a restriction on the amount of buy-to-let properties you can have with any lender (including them).”

As there is vastly different lending criteria in the area of multiple buy-to-let deals this is an area where an independent broker can really show their worth, according to Mr Boulger.

He says: “With somebody who already has several mortgages, a broker can rule out what lenders they now cannot use. It is only once a broker has done that you can assess which deal to go for.

“There are factors you always have to take into account like is a flat rate fee or a percentage fee better and do you want a short-term deal or a long-term deal. I would say the starting point is to identify which lenders the client already has mortgages with and what is the value of those properties.”

“Some of our clients with quite a number of properties will have a spreadsheet that shows exactly where their properties are, who the mortgages are with, how much the mortgages are for and what they believe the value of the property is.

“That is helpful as if you can see the individual values you can assess if there are any mortgages where it might be worth remortgaging or taking a further advance, particularly if they need a relatively high loan-to-value on a new purchase.

“It might make sense to raise some more cash elsewhere to perhaps get a lower rate.”

Steve Olejnik, sales director of Sevenoaks-based broker Mortgages for Business, says advisers should be aware that some lenders do not like it if an investor’s income is coming solely from property.

Comprehensive details of the portfolio are essential if the best deal is to be secured, according to Mr Olejnik, who echoes Mr Boulger’s suggestion of producing a spreadsheet detailing the types of property, what the value of the various properties are, what rent is charged for each property and mortgage payments.

Given the complex criteria, the interworking of different issues, different types of buy-to-let and investment property, and the larger than average sums involved, Christine Newell, partnership manager of Paradigm Mortgage Services, says any client wishing to look at this type of borrowing should talk to a professional financial adviser and mortgage specialist.