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Moving multiple mortgaged properties onto a single buy to let deal can offer clear advantages, explains Matt McCullough, Head of Sales & Development at Aldermore.
The last 10 years have seen huge changes for landlords, from George Osborne’s cuts to tax relief on finance to the new Labour government’s Renters’ Rights Bill, and plenty in between.
But the scope of the changes over the last decade – including those that meant a higher tax bill for many landlords – has had an impact on the appeal of buy to let as an investment, especially as mortgage rates have risen.
As potential profitability has been dented, we’ve seen more landlords holding their properties in a limited company structure, fewer so-called ‘amateurs’ entering the market, and larger landlords looking for greater yields in specialist sub-sectors.
Many portfolio landlords are also searching for a competitive edge when it comes to their mortgage finance. Savvy property investors, and their mortgage advisers, understand that innovative products, such as a multi-property mortgage, can simultaneously boost their borrowing power while reducing fees and streamlining their administration.
Multi-property mortgages (not to be confused with multi-unit buy-to-let) go beyond simply holding more than one buy-to-let mortgage with one lender.
In this case, the mortgages are actually combined into one mortgage account. Only a handful of lenders, including Aldermore, offer this type of mortgage, so brokers and landlords may not be familiar with their unique benefits.
With Aldermore’s multi-property mortgages, a landlord can have up to 30 buy to let mortgages on one mortgage account. All we ask is they are the same transaction type and must all complete on the same day. So it’s perfectly suited for bulk remortgaging or purchasing and those incorporating into limited company structures from individual name. This is available up to a maximum combined loan size of £10m up to a 65% combined loan-to-value ratio (or £5m up to 75 LTV). Rates are competitive, currently starting at sub-5% and landlords can choose from a range of different fee options, including fee-free.
Multi-property mortgages have been designed to help larger landlords leverage their overall portfolio to access better borrowing opportunities, from refinancing to raising additional borrowing. They also streamline the process and admin involved in applying for and managing multiple mortgages, freeing up busy landlords to untangle the ever-tightening red tape.
Below are just some of the advantages of multi-property mortgage for portfolio landlords:
Just one application needs to be made for up to 30 mortgages, which means less admin for you and your landlord client. There is also only one set of packaging requirements, so you only send your client’s ID and upload the documents once, for example, saving a huge amount of time before and during submission.
Your client will only need to pay one product fee, even if they have 30 properties on their multi-property mortgage, or they could even take a fee-free option.
Aldermore has fee-free multi-property mortgages from 5.89% or lower rate, fee-paying options, including rates from 4.99% with a 3% product fee. We also offer free valuations on all purchases and remortgages and free legals on remortgages. *
On top of this saving, for our limited company mortgages, we only charge for our personal guarantees and legal advice per application. So if a landlord chooses our multi-property option for their 30 mortgages instead of the traditional individual applications, this instantly saves thousands of pounds for those moving property into limited companies or refinancing those already in their desired ownership structure.
Your landlord benefits from less administration with a multi-property mortgage, not just at the point of sale, but for the duration of the term. They have one mortgage account which means only one direct debit and one date when all the mortgage costs come out – great for managing cashflow. In addition, there’s one review date for all properties to be remortgaged which is easier for both them and you to keep track of.
Not every property in a portfolio performs well at the same time. That’s the nature of any business.
A property that has low rental income or a high LTV, or both, can be difficult to refinance, especially now interest rates are higher than two years ago. But with a multi-property mortgage, the application is stressed across all properties, looking at the combined LTV and rental coverage. So your client can still refinance a property for which the numbers wouldn’t stack up on its own, because it’s held up by the rest of their portfolio. They can also raise additional finance by leveraging the whole portfolio, for example if they want to put down a deposit on a new purchase.
If your landlord has a multi-property mortgage, they don’t need to feel tied into it. They can release properties from the mortgage, to sell, refinance elsewhere or for any reason, as long as the stress tests and LTV stack up across the remaining portfolio.
The landscape for landlords has become more challenging over the last 10 years and there are undoubtedly more hurdles ahead.
We’re confident that the vast majority will adapt to the new regulations, as they always do, and continue to provide quality homes to tenants.
Aldermore backs you and your buy to let clients all the way, with a wide choice of innovative products, from standard to complex buy to let mortgages, including our multi-property range. By making mortgage finance easier to manage and giving landlords the ability to leverage their whole portfolio to refinance and raise funds, we can help them to focus on, and overcome, any challenges ahead.
* information correct as at 10 October 2024
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