Portfolio mortgages for incorporation

Some lenders will lend to a company that has taken over a portfolio under incorporation relief, and acceptance depends on the lender's criteria for the structure, the transfer and the new company. Incorporation relief postpones capital gains tax where a business is transferred to a company as a going concern in exchange for shares; whether a letting portfolio is a business is a question of fact, and for transfers on or after 6 April 2026 the relief has to be claimed (HMRC: CG65700). It is a capital gains tax relief only, so Stamp Duty Land Tax is worked out separately. The structure should come from a tax adviser, and lenders need to know about it early.

A background portfolio stress test checks whether the rent from all of a landlord's mortgaged properties covers the interest on all their loans, at a stressed rate, by the ratio the lender requires. It sits alongside the test on the new property, and a portfolio below the lender's background ratio can be declined for a new loan even if the new property passes its own test. Lenders run it differently: some stress every existing loan at the same rate as the new one, and others use a lower background ratio or review the existing portfolio without a set ratio. Banks and building societies apply it within the Prudential Regulation Authority's buy to let standards (Bank of England: SS13/16).

A portfolio mortgage is finance for a landlord with several buy to let properties. It can be a set of separate mortgages, each assessed with the rest of the portfolio in view, or one facility secured on several properties. A borrower with four or more distinct mortgaged buy to let properties is a portfolio landlord under the Prudential Regulation Authority's underwriting standards, and banks and building societies look at affordability, risk and loan to value across the whole portfolio as well as the new loan (Bank of England: SS13/16). A facility over several properties can make each property security for the whole debt.

Banks and building societies following the Prudential Regulation Authority's buy to let standards assume an interest rate of at least 5.5% over the first five years when they test the rent. Where the loan is fixed or capped for five years or more, they can use the fixed rate itself, the pay rate (Bank of England: SS13/16). Other lenders set their own tests. On the cases we arrange, lenders commonly stress two-year fixes at around 5.5% and five-year fixes at around 4.5%, and then apply their own rental cover ratios, commonly 125% for limited companies and basic-rate taxpayers and 145% for higher-rate personal borrowers. Stress rates and ratios are lender criteria and change.

Not necessarily. A portfolio landlord can borrow on standard buy to let products or on products designed for portfolios. Portfolio products sit in a narrower market, so they are cheaper only where the products available compare well on total cost. Specialist portfolio pricing can be higher. A facility covering several properties, on the other hand, can save on separate valuation and legal work, and some products include a free valuation or free legal work. The total cost over the fixed period, fees included, is a fairer test than the headline rate. Mortgage Lane charges no broker fee on portfolio loans.