Portfolio mortgages for re-mortgaging existing portfolios

Yes, where the properties are on separate mortgages a landlord can remortgage some of them and leave the others in place. The new lender assesses the properties it lends on and, for a portfolio landlord, the rest of the portfolio too, including the loans left behind. Where several properties share one facility, taking some out needs the lender's agreement on release terms, and the properties that remain have to meet its criteria. Banks and building societies apply the Prudential Regulation Authority's buy to let standards to a remortgage that adds borrowing, but not to one with no borrowing beyond the amount owed and fees (Bank of England: SS13/16). Early repayment charges on the loans being replaced are part of the cost.

Yes, portfolio re-mortgage lenders typically require additional documentation in the UK. This usually includes a full portfolio schedule, asset and liability statement, rental income evidence, and sometimes a business plan, allowing lenders to assess affordability, risk, and Loan to Value (LTV) across the entire portfolio.

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.