Improving professional landlord mortgage rates boosting buy-to-let portfolio refinance market
Buy-to-let lenders have been busy lowering the price of their professional landlord and property portfolio mortgages.
So far this week, lenders including Paragon, Landbay and Accord, West One, CHL and Coventry for Intermediaries have lowered their buy-to-let mortgage rates. Some have reduced rates by over 1%.
While many landlords with one of two properties have exited the buy-to-let market, most professional landlords have remained. Many are on trackers or their lender's standard variable rates, but now that rates are cheaper, they are keen to refinance on to much lower deals.
Aaron Strutt, product director at Trinty Financial, says: “There is more activity in the buy-to-let market than there has been for a long time. Many lenders are offering cheaper deals to borrowers with equity in their properties and strong rental income. We are helping more landlords refinance away from their banks to secure lower rates.”
How much are Professional landlord mortgage rates now?
The Mortgage Works offers a sub 4.3% two-year fixed rate with a 3% arrangement fee, while BM Solutions has sub 5% rates with a £3,999 arrangement fee. NatWest for Intermediares has sub 4.75% buy-to-let rates with £995 arrangement fees. Applicants will need a 40% deposit and a clear credit history to access these rates.
Professional landlords often consider remortgaging for:
1. Better interest rates: While many lenders offer their existing landlord clients new rates, they are often not as competitively priced as some of the lowest rates on the market. Before locking into a new deal, it pays to check the market to find out what is available.
Tougher buy-to-let stress tests have made it impossible for many landlords to switch lenders, but the market is easing, especially for higher earners qualifying for top-slicing. This is where they can use their personal income as well as the rent to secure a larger loan.
2. Release equity: By remortgaging, landlords can release equity from their properties. This additional capital can be used for further property investments, renovations, or other business purposes.
3. Consolidation to one buy-to-let lender: If a professional landlord has multiple mortgages on different properties, they may consider consolidating them into a single mortgage for easier management. This means they have one rate and one mortgage payment.
4. Switching loan types: Landlords may want to switch from a variable-rate mortgage to a fixed-rate mortgage or vice versa, depending on their financial strategy and market conditions.
5. Better customer service: Professional landlords might switch lenders to access more favourable terms, better customer service, or additional financial products. Some lenders offer professional landlords a dedicated contact, making it easier to borrow more or restructure debt.
Buy-to-let – Switching from personal to limited company ownership
There has been a real push towards landlords switching to limited company buy-to-let mortgages as landlords following the recent tax changes. As a result, more lenders offer limited company buy-to-let mortgages.
Many limited company buy-to-let products are only available to Special Purpose Vehicles (SPVs), set up solely for the buying, selling and letting of their own residential property. A floating charge over the assets of the company isn't required, although personal guarantees may be required from all directors.
Legal and tax implications: Consult with legal and tax professionals to understand the legal and tax implications of remortgaging to a limited company.
Trinity Financial strongly recommends seeking professional tax advice before starting this process, as it’s not necessarily the most tax-efficient option for everyone. Mortgage brokers can only offer guidance on property finance, not tax-related matters.
Some lenders cap the number of properties a landlord can have in the portfolio
Some buy-to-let lenders cap the number of properties a landlord can have in a particular bank or building society, although some do not have limits. For example:
- Barclays - The maximum number of mortgaged rental properties must not exceed six with Barclays or 10 across all lenders.
- BM Solutions - previously Birmingham Midshshires - A maximum of five buy-to-lets or 10 mortgaged properties in total.
- Family Building Society for Intermediaries - No maximum number of properties in a portfolio.
- Fleet Mortgages - No restrictions on the number of properties or aggregate borrowing held with other lenders.
- Kent Reliance - No limit on the number of buy-to-let properties.
More lenders charging huge buy-to-let arrangement fees
Some buy-to-let lenders charge landlords huge mortgage arrangement fees of between 1% and 7% of the loan amount to offer cheaper rates. This has put many landlords off switching mortgage lenders, although many have had to choose between paying high fees or selling their properties. Not all lenders charge high fees but landlords struggling to meet rental stress tests are often left with fewer options.
What is the definition of a Portfolio Landlord?
Many lenders classify someone as a professional landlord with four or more mortgaged buy-to-let properties, including when they have three completed and are in the application stage of the 4th.
How much of a deposit or equity do landlords need to refinance a portfolio?
Most lenders prefer that landlords have lots of property equity to switch deals —ideally, 30% or 40%. Some take a cross charge across the portfolio so they can be at higher loan-to-values.
How to get your buy-to-let portfolio rate switch application started
Trinity Financial's brokers typically ask landlords to send over the property portfolio spreadsheet showing their properties, addresses, rental income, and approximate values with outstanding mortgage balances and the lenders. Landlords need to have paid the relevant taxes to HMRC.
Call Trinity Financial on 020 7016 0790 to secure a buy-to-let portfolio rate switch, book a consultation, or complete our mortgage questionnaire.
The information contained within was correct at the time of publication but is subject to change.
Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.
Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage
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