Is it still possible to remortgage a buy to let mortgage portfolio?

by Aaron Strutt

Sep 01 2024

Yes, it is possible to remortgage a buy-to-let (BTL) property portfolio. Remortgaging involves replacing your current mortgage(s) with a new one, either with the same lender or a different one, often to secure a better interest rate, release equity, or restructure your finances.

Landlords are still making large remortgage transactions, shifting their entire portfolio from their own name into a company structure in a single day as they look to mitigate their tax liability. They also want to make their portfolios more manageable with one direct debit and one interest rate. 

Mortgage lenders have different rules for professional landlords, including rates and rental stress test rules. Lenders like CHL Mortgages define a portfolio landlord as someone with four properties. Specialist lenders will assess property portfolios and the overall rent, equity, and outstanding mortgage balances.

Aaron Strutt, product director at Trinity Fiancial, says: "It tends to be the more specialist buy-to-let lenders that want to issue portfolio buy-to-let landlord mortgages. Buy-to-let lenders have been lowering their rates recently, so the mortgages are more competitively priced, and some arrangement fees have come down.

"Our brokers will ask you to send over details about your buy-to-let portfolio with  information including the property addresses, rent, outstanding mortgage balance and mortgage tie-in periods."

Here are some of the buy-to-let lending criteria suitable for professional landlords:

Here are some key points to consider when remortgaging a BTL property portfolio:

1. Remortgaging Individual Properties or the Entire Portfolio

• Individual Property Remortgage: You can remortgage one or more properties within your portfolio individually. This allows for flexibility in managing each property’s mortgage terms separately.
• Portfolio Remortgage: You can remortgage multiple properties in your portfolio at once with a single lender under one portfolio mortgage. This simplifies the process and may offer better overall terms.

2. Reasons for Remortgaging Portfolios

• Lower interest Rates: You may secure a better interest rate than what you’re currently paying, which can improve your rental yield and overall profitability.
• Release Equity: You can release some of the equity in your properties, using the funds for other investments, property renovations, or portfolio expansion.
• Debt Restructuring: You may want to consolidate multiple mortgages into one for easier management or to adjust payment terms.
• Change of Terms: To switch from an interest-only mortgage to a repayment mortgage (or vice versa), or adjust the loan period.

3. Eligibility Criteria

• Loan-to-Value (LTV) Ratio: Most lenders will assess the LTV, which is the ratio of the loan amount to the value of the property. For buy-to-let mortgages, typical LTV ratios are around 60-75%, though this can vary.
• Rental Income: Lenders will assess your rental income to ensure it covers 125-145% of the mortgage payments, as required by regulatory standards (often referred to as the "rental cover" or "interest coverage ratio").
• Property Portfolio Size: Lenders may have different criteria depending on the size of your portfolio. Some specialize in larger portfolios, while others focus on smaller ones.
• Credit History: A strong credit profile is essential to secure better rates and approval from a lender. However, credit blips may be accepted. 
• Affordability: For larger portfolios, lenders may conduct a more comprehensive affordability assessment, reviewing your entire property portfolio’s income, rental yield, and management strategy.

4. Costs Involved

• Early Repayment Charges (ERC): If you're still in the initial period of a fixed-rate mortgage, you may incur early repayment charges for switching to a new deal.
• Valuation and Legal Fees: There may be costs associated with property valuation, conveyancing, and other administrative fees.
• Arrangement Fees: Lenders may charge arrangement fees for setting up the new mortgage.

5. Types of Remortgage Products

• Fixed-Rate Mortgages: Two and five-year fixes are still the popular options for landlords.
• Tracker Mortgages: Bank of England’s base rate trackers are available but fixes tend to undercut them.
• Discounted Variable Rates: Provides a discount on the lender’s standard variable rate (SVR), though this may rise or fall. Not the most popular choice.
• Offset Mortgages: Links your mortgage to savings, allowing you to reduce interest by offsetting your mortgage balance with the savings you hold. Available through a limited number of lenders.

6. Specialised Lenders

• For more extensive portfolios, some lenders offer "portfolio mortgages" specifically designed for landlords with multiple properties. These products often come with bespoke terms and pricing to accommodate the needs of professional landlords.

7. Does it matter how big the property portfolio is?

• No. One lender has just provided financing on a complex refinance deal totalling £42.5m, comprising 94 units spread across 17 limited companies. The loan application was funding for a mixture of semi-commercial and buy-to-let assets, all to be completed on one day and moved to a single portfolio with the lender, as well as raising additional capital for further investments.

Remortgaging a buy-to-let property portfolio can be a good strategy to optimize your investments, but it requires careful consideration of costs, rental income, and long-term goals. For tailored advice, it’s advisable to consult with a mortgage broker experienced in buy-to-let and portfolio lending.

Call Trinity Financial on 020 7016 0790 to secure a buy-to-let portfolio remortgage, book a consultation, or complete our mortgage questionnaire. 

The information contained within was correct at the time of publication but is subject to change.

The Financial Conduct Authority does not regulate most Buy to Let Mortgage

Your mortgage is secured on your property. Your property may be repossessed if you do not keep up repayments on your mortgage