Mortgage options for professional landlords

If you are looking at people with five to 20 properties then that is not necessarily a major problem, according to Ray Boulger, senior technical manager for John Charcol, it just means they cannot have more than a certain number of properties with a certain lender.

He says investors in this category will often have to spread their borrowing around if they wish to stick with mainstream lenders. This is because some lenders, as well as having limits on the total number of properties an investor can have, will also set a limit on how many loans they can have.

Post-credit crunch, for example, advisers should remember that the likes of Lloyds Banking Group now covers Birmingham Midshires, Halifax and Cheltenham & Gloucester to name but three of the banking giant’s brands. As the lending restriction would apply at group level, all Lloyds brands would no longer be able to lend once the portfolio reached a certain size.

Christine Newell, partnership manager of Paradigm Mortgage Services, says investors with multiple properties who want to have all their borrowing in one place will find themselves limited to the more commercially-orientated lenders such as Aldermore Commercial and Shawbrook Bank.

On a deal-by-deal basis, Ms Newell says these lenders can look at clients seeking to simultaneously finance five, 10 or 20-plus property portfolios.

She says: “These deals do not generally sit well in the mainstream buy-to-let market, which has little appetite to lend to the larger property investor.”

But anyone with more than five properties could probably find better prices and higher gearing by opting for individual mortgages on their different properties, according to Steve Olejnik, sales director of Sevenoaks-based broker Mortgages for Business.

He says trying to obtain a single loan across a portfolio limits your options on the number of lenders you can use.

Mr Olejnik says: “Those lenders that tend to look at it (a single loan for multiple buy-to-let properties) are commercial and tend to have tighter stress testing on what rental income they need to see. That in turn brings down the amount of money they can raise against the portfolio.”

With multiple buy-to-let deals, Mr Olejnik says it can be a more manual application process.

He says: “Most of the lenders that deal with professional investors - while the odd couple are online - it generally is a more manual process with paper-based applications required alongside lots of supporting information.

“Specialist brokers like us have to have direct contact with the underwriters so that we can talk through a deal sometimes before submitting it in order to iron out any creases.”