Howard Levy, director at mortgage broker SPF Private Clients, says: “It is an ever-changing environment for these clients, with a lot of work going into every case to ensure that they fit criteria at the best rate.
“With so many boxes now needing to be ticked, we are finding more portfolio clients coming to brokers like us who specialise in this area,” he adds.
To remortgage or not to remortgage?
He explains while remortgaging remains an option, portfolio BTL clients are finding other ways to fund the expansion of their business.
Mr Levy says: “Many portfolio clients are still buying properties with funds they have already built up, refurbishing the properties, letting them out and then taking finance on the finished product. This seems to be the preferred route, rather than remortgaging to release funds and then buying, although some portfolio clients do this.
“It is still possible to remortgage up to 75 per cent loan to value. Some lenders will go higher, but for most clients this is as much as they wish to borrow.”
Adam Hosker, founder of Bespoke Finance, acknowledges the process of remortgaging properties to expand has become more difficult.
“You could remortgage up to 85 per cent LTV, releasing equity for an onward purchase. You still can, but the background portfolio is probed, including portfolio-wide LTV checks and portfolio-wide rental stress tests,” he notes.
“Established landlords are now asking [advisers and brokers] more about repayment mortgages and de-leveraging – to have profits as profits, not interest payments allocated as profits.”
Seeking advice
Mr Hollingworth suggests landlords will need to get used to having to provide more information and detail about their broader portfolio, along with those relating to the property in question.
But he adds that the provisions are sensible and have led to some lenders adapting the services and tools they provide.
“Lenders have sought to help these landlords with the use of technology platforms, where portfolio details can be uploaded which will make future remortgages and acquisitions simpler,” he explains.
“Having a good overview of the portfolio and understanding of the rental requirements will also help them gauge whether they have adequate equity – in particular, properties that have been held for some time that could enable them to release equity toward growing their portfolio.”
Given that the process of remortgaging is becoming harder, for many portfolio BTL clients, seeking advice is going to be vital when it comes to deciding whether to remortgage or not.
James Bunker, head of property at Vardags, urges landlords to take the time to find the right mortgage broker and the right accountant, “each of whom must understand the client’s individual circumstances and their expansion plans in the short, medium and long term” and have “sufficient experience in working with clients who own and who wish to grow their BTL property empire”.
