Portfolio mortgages – To be or not to be?

by Readers Question

11:28 AM, 18th October 2016
About 2 years ago

Portfolio mortgages – To be or not to be?

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Portfolio mortgages – To be or not to be?

We have 4 properties on BTL mortgages, all being in joint personal names with partner and high street lenders. Our LTV is ~60% on all properties, mostly because of higher value as being in London. The median rates is 1.8% with most on 2 year tracker. eggs

I wonder if we should go for portfolio mortgages?

My limited research tells me it’s more convenient and easier to release equity on new purchases. However, I don’t know the typical rates, affordability including rental returns criteria etc. I would appreciate some comments on pros and cons of portfolio mortgages.

Many thanks,

Sunny



Comments

Neil Patterson

11:42 AM, 18th October 2016
About 2 years ago

Hi Sunny,

Post Credit Crisis most portfolio loans like the Popular TMW one have been withdrawn by mainstream BTL lenders.

This was because many borrowers became trapped in reducing LTV maximums and increased stress testing requirements thus negating the flexibility they offer.

My gut feeling from past experience of readers is that it is now safer especially with all the changes recently and potentially in the future to keep the security separate and not tie them all in together.

Also you will not beat an average rate of 1.8% at the moment with current rates.

Jon Pipllman

12:26 PM, 18th October 2016
About 2 years ago

Neil is right, the market has changed

I am sure that if you are big LL (hundreds of properties with <50% LTVs), there are some stunning finance deals to be had out there, with built in headroom and LIBOR + not much %

But on small portfolios, the products aren't out there as they once were and 1.8% is pretty good

The one thing you might want to consider is that now (pre PRA, Term Funding Scheme window open, 0.25% base rates) might be the best time for BTL mortgages for a long time. Come 1 Jan it could potentially change.

It can't hurt to talk to your existing lenders, or to track down a couple of good brokers and do some sums. Even if you decide not to change anything, keeping up to date with the market is no bad thing.

Sunny K

13:04 PM, 18th October 2016
About 2 years ago

Thanks Jon and Neil.

I am looking at ways of increasing LTV closer to 75% without compromising too much on rates.
I have spoken to Natwest, accord and TMW. They reckon only way of increasing borrowing is either 5 years fixed (lower rental stress calculation) or increasing rent (not likely). My broker can get best rate of 3.19% with accord on 5 years fixed (1% higher than 2 years fixed for 75% LTV). I can get up to 75% LTV on most of my properties with 5 years stress test but not 2 years one.
5 years fixed for some properties might be the way forward for me. The banks are clearly banking on rates not rising more than 1% in medium term.

Paul Green

15:32 PM, 18th October 2016
About 2 years ago

With portfolio mortgages, you put all your eggs in 1 basket and are at the mercy of the 1 lender who has you over a barrel and in the past Lanlords have been stung when the portfolio has been revalued at a lower rate (LTV) I would like any investment spread the risk by spreading the loans & sticking with vanilla high street lenders, besides on portfolio mortgages your be paying higher arrangement fees and tracking LIBOR not BOE...


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