What is a portfolio mortgage? Portfolio landlord rules explained

A portfolio mortgage is a buy-to-let mortgage for a portfolio landlord, either on one property assessed against the whole portfolio, or a single loan secured on several properties. Most landlords with portfolios still hold one mortgage per property, but the lender looks at all of them when it assesses a new application or a remortgage.

The rules lenders follow for portfolio landlords come from the Prudential Regulation Authority's underwriting standards for buy-to-let lending, which lenders built into their own criteria.

A landlord with four or more mortgaged buy-to-let properties is treated as a portfolio landlord by lenders following these standards. The count includes properties mortgaged with any lender, usually including those held personally and in companies where the landlord is a director. Unmortgaged properties are often left out of the count, though lenders still want to know about them.

Once the threshold is passed, every new application or remortgage is assessed against the whole portfolio. That applies even if the new loan is small, and even if the landlord stays with the same lender.

Lenders test the rent against the interest on the new mortgage at a stressed rate, as for any buy-to-let, and then look at the whole portfolio. Some set a minimum overall rent cover or a maximum overall loan-to-value, and some allow strong properties to balance weaker ones. Others only check that the portfolio is not losing money.

Each lender's approach differs, so a portfolio that one lender declines may suit another. Lenders also look at concentration, such as many properties in one area or one type.

Portfolio landlords are usually asked for a property schedule listing each property, its value, mortgage, lender, monthly payment and rent, together with a business plan and cash flow forecast, recent bank statements and tax returns or company accounts. Some lenders provide their own template schedule, and many want it signed and dated.

Keeping a schedule up to date, with tenancy agreements and safety certificates to hand, makes each application quicker. The portfolio landlord mortgages section explains how lenders and brokers handle portfolio cases.

Landlords who plan to grow usually find it easier with lenders that are comfortable with large portfolios and with a clear record of rent, voids and costs. Experience counts: lenders look for a history of managing tenants and properties, and some set limits on the number of properties or total borrowing with them.

Using a limited company for new purchases is common among growing landlords, though company and personal portfolios are often assessed together.