Expand your portfolio with buy-to-let
A Buy-to-let (B2L) mortgage allows a borrower to purchase a residential property as an investment. The property then acts as security for the mortgage loan and when rented out the monies paid by the tenant rent the property covers all of the mortgage costs.
In contrast, a portfolio mortgage is a loan over multiple properties and loans of this type straddle the divide between B2L and commercial mortgage lending. While a standard B2L mortgage is a loan against a single property, portfolio mortgages are loans against multiple investment properties. While the former is usually interest-only, the latter is typically capital and interest.
In recent years, the demand for portfolio mortgages has increased significantly. Changes in taxation have driven this demand and made them more attractive to professional landlords than single B2L mortgages. Also, a portfolio mortgage makes it easier to leverage increases in the portfolio value to release cash for other purposes.
The high cost of housing in the U.K. has resulted in the proliferation of more creative types of housing schemes. These unique nature of these types of accommodation often means that they require specialist mortgages.
Some examples of more specialist property types
- HMOs – houses in multiple occupation. These have multiple tenants from different families who share bathing and kitchen facilities.
- MUBs – multi-unit blocks, usually freehold. Typically blocks of self-contained apartments.
- SSCs – single self-contained. These are studio flats, often in converted office buildings.
- B2R / BTR – build to rent. Purpose-built apartment blocks, managed by professional landlords. They typically need to include some affordable housing.
- SA – serviced accommodation. These are fully furnished properties, available on both short or long term let. This type of housing may also offer facilities similar to those provided by hotels.
Terms and rates available in the market
Mortgage providers typically lend a set percentage of the purchase price of a property. This percentage is the loan to value (LTV). The LTV on standard buy-to-let products can be at the higher end. As of late 2018 LTVs of 85% or more are available. However, these come with extra conditions attached and usually have higher interest rates than mortgages with lower LTVs.
In general, more specialist mortgages tend to have lower LTVs. In these cases, figures ranging from 65 – 75% is more the norm. However, the percentage offered is also dependent on the borrower’s circumstances.
As long-term products, the interest rates available tend to be very competitive. The borrower gets a choice between fixed or variable rates. A fixed rate product allows the borrower to plan monthly expenditure while a variable rate can result in decreasing payments.
There is an ever-growing range of specialist B2L mortgage products available to borrowers. The challenge is to find the product that best suits your particular needs and circumstances. That is precisely where the services of a specialist broker such as Fusion Finance can make all the difference. Firstly, we bring expertise along with access to the wider lender market including private banks and funds. Secondly, we aim to find you the best funding for your particular circumstances. Finally, our help and advice are impartial, in confidence and given without obligation.
Please contact us today to see how we can help you or submit an email enquiry, and we will get back to you.
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