Buy-to-let mortgages changing for portfolio landlords

Buy-to-let mortgages changing for portfolio landlords

Buy-to-let mortgages are changing. If you are a portfolio landlord then you need to be aware that new buy-to-let mortgage rules will be coming into effect at the end of September. The PRA (Prudential Regulation Authority) will soon be enforcing tougher and more stringent standards for portfolio landlords when it comes to borrowing money.

A portfolio landlord, as defined by the PRA, is landlord who owns four or more buy-to-let properties. However, the changes will also apply to landlords who own three buy-to-let properties and want to take out a mortgage on a fourth.

The new rules stipulate that any landlord who wants to apply for a buy-to-let mortgage on a new rental will have their entire property portfolio scrutinized by the lender before deciding what mortgage deal, if any, they can offer. This potentially means that some portfolio landlords may not be approved by some lenders if they have properties in their portfolio where the amount of rent currently received is not enough to cover the mortgage payments.

From the 30th September, lenders will also need a full breakdown of the landlord’s portfolio, a business plan and a cash flow projection to support a new buy-to-let mortgage application.

For portfolio landlords, it is advisable to check with lenders where you stand, especially if you’re looking to add to your portfolio. It’s also worth looking at re-mortgaging and getting an up to date rental valuation on your property. This will mean that your lender will have to recalculate your loan to value and if it comes out lower, you are likely to get a better interest rate and a larger selection of lenders to approach.