On the 30th of September 2017, lenders implemented changes to the way in which buy to let mortgage applications are underwritten for portfolio landlords.
The definition of a portfolio landlord, according to the Prudential Regulation Authority, is defined as “borrowers with four or more distinct mortgaged buy-to-let properties, either together or separately, in aggregate”.
The main change which the PRA has brought in is that it requires all lenders to carry out specialist affordability checks on any borrower who falls in to the Portfolio Landlord category. This has in turn seen a lot of lenders stop lending to landlords with 4 or more investment properties.
Lenders are now having to check that the landlord is not over-exposed and as such will look to stress test the landlord’s buy to let portfolio. So, whereas before, the lender wouldn’t pay too much attention to any properties in the background as long as they were self-financing themselves, the lender will now be looking at the whole property portfolio and underwriting the portfolio as a whole. This in turn means more preparation and more paperwork to prepare for the mortgage application.
The information / documents which most lenders are now looking for are:
- An up to date property portfolio spreadsheet
- A Business Plan
- Cash flow forecasts
- Last 3 months bank statements
- Submitted tax returns
- Latest tax calculations or SA302’s
- Income and Expenditure statements for your portfolio
At IMS we can help you to prepare the above and we have access to specialist lenders and products for Portfolio Landlords. This can be a confusing time for landlords looking to review or even start their portfolio but we can take the stress away from you and make the process as smooth as possible.