Investment lending on residential property, usually held through a limited company or an SPV. The rent has to cover the payment by a set margin, and from four mortgaged properties onwards the whole portfolio is underwritten, not just the one you are buying.
2 to 30 years · up to around 75% LTV · ICR typically 125% to 145%
Typical situations
Most portfolio purchases now go into an SPV, because interest is treated as a company expense rather than caught by the restriction that applies to personal ownership. Lenders price company lending differently and want the company set up with property SIC codes before an application. That is a five-minute job at the start and a three-week delay if it is left until underwriting.
Higher yield, a shorter lender list, and a valuation that may come back on an investment basis rather than bricks and mortar. Licensing and the room count both change the outcome, so both go in at the start.
Taking the deposit for the next purchase out of one that has risen in value. What limits it is the rent, the interest cover the lender requires, and its view of the portfolio behind you.
Interest cover ratio is the rent divided by the mortgage payment, tested at a stressed rate rather than the rate you pay. A company or a basic rate taxpayer is typically tested at around 125%, a higher rate taxpayer at up to 145%. The same property and the same rent therefore support noticeably different loan sizes depending on who is borrowing.
Limited company lending is assessed differently from personal lending. The company is usually a special purpose vehicle with nothing in it but the property, so the lender takes a debenture and personal guarantees from the directors and underwrites the people behind it. The SIC codes on the company have to match what it actually does.
From four mortgaged buy-to-let properties you are a portfolio landlord for lending purposes. The lender then underwrites the whole portfolio: aggregate loan to value, overall rental cover, and usually a business plan and cash flow alongside the application. A schedule that does not reconcile with the mortgage statements is the quickest way to stall a straightforward purchase.
Indicative market ranges, not an offer of finance. Terms depend on the lender, the security and your circumstances.
What the lender assesses
What goes in the pack
Lenders want a company whose registered activity is property letting. Correcting it part-way through an application costs weeks, so it is checked before anything is submitted.
From four properties on, the schedule is underwritten as closely as the purchase. We build it from the mortgage statements rather than from memory, so the figures match what the lender can already see.
Whether a licensed HMO is valued as a house or on its investment value changes the loan materially. The licence, the room schedule and comparable room rents go to the valuer at instruction rather than afterwards.
Where interest cover is tight the options are a smaller loan, a different product structure, or a lender that will consider other income. All three are better discussed before a valuation fee is paid.
That is a tax question as much as a finance one, and it turns on your income, your plans and how long you intend to hold. Most portfolio purchases now go through a company because interest is a company expense. Take the tax advice from your accountant; we will tell you what each structure does to the lending.
Interest cover ratio is the rent divided by the mortgage payment at a stressed rate. At 125% a property letting for £1,000 a month needs a stressed payment no higher than £800. At 145% the same rent supports a smaller loan, which is why the same property produces different offers for different borrowers.
For mortgage purposes, generally yes once you hold four or more mortgaged buy-to-let properties. From that point lenders underwrite the portfolio as a whole: aggregate loan to value, overall rental cover, and usually a business plan and cash flow forecast submitted with the application.
Often, though the lender list is shorter and the loan to value is usually lower. What decides it is the use of the unit below: an office is treated very differently from a hot food takeaway. Tell us the use at the start so the case goes to lenders that accept it.
Most buy-to-let lending to companies and portfolio landlords sits outside Financial Conduct Authority regulation. Letting to a close family member makes it a regulated buy-to-let, and we refer those cases to an appropriately authorised firm rather than arranging them ourselves.
For an auction lot or a property that will not let in its current condition, with the buy-to-let mortgage as the exit.
Where the property is commercial or mixed use, and the assessment moves to the trade or the tenant.
Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
We will come back with the loan the rent supports, the structure that fits your tax position, and the lenders that take the property type.
