Being a landlord means that you can often have many different properties that you own and manage all of which have their own equity and mortgages attached to them. Many landlords now choose to have all their properties in one place, which is known as a portfolio. And this contains all the information regarding mortgages and equity which relates to each property. One way of making things easier regarding mortgage repayments for landlords is to put all the properties together and pay one monthly mortgage payment which covers all the properties in the portfolio.
Then when it comes to buying a new property, lenders will take into account all of the properties that are in a landlords portfolio and use the equity in it to borrow for further properties. This will mean transferring all the properties that you want to be considered to the new portfolio mortgage lender.
There are of course advantages and disadvantages involved with taking out a portfolio mortgage and here are some of them detailed below.
Advantages and disadvantages of a portfolio mortgage
Advantages
Some portfolio mortgage lenders will allow a landlord to borrow up to 75% of a new property's value without giving any information about the rental gained from their other properties. As loan to value and rental income is taken as an average across the portfolio a portfolio mortgage can be taken out for more than a property's value or maximum rental mortgage amount. There is only one further advance needed to expand the portfolio as a landlord is able to utilise the equity already held in their total portfolio. All the properties that are in a portfolio mortgage are treated as having one mortgage averaged between them, this results in one mortgage payment per month which covers all the properties.
Disadvantages
If for whatever reason one, or even more of the property's that are in the portfolio underachieves then it is down to the landlord to make sure that this underpayment is met. You will need to put your entire existing buy to let properties mortgages with the same lender, which could involve paying exit fees to your existing lender.
Portfolio mortgage information and advice
With the credit crunch main lenders have withdrawn from the buy to let mortgage market, this makes finding a portfolio mortgage even more difficult than ever before. For more information on getting a portfolio mortgage you can visit one of the many online mortgage comparison websites and read up on the subject. Or if you would rather speak to an advisor and get more advice contact an independent financial advisor who offers independent, fee free advice on mortgages.
