Portfolio BTL criteria
Lending criteria
Portfolio
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Portfolio landlord definition
Definition of a Portfolio landlord
- Portfolio landlords will be defined as those having 4 or more mortgaged BTL properties.
- The definition is applicable at application level not applicant level. Therefore for 2 landlords applying together, the total number of their individual and joint mortgaged properties will be taken into account.
- We’ll include other applications currently ‘In-flight’ with Accord and other lenders to determine the total number of mortgaged BTL properties.
Examples:
| Scenario | Portolio landlord? | |
|---|---|---|
| 1 | App 1 and 2 have 3 BTL properties in joint names and App 1 has another in sole name | Yes |
| 2 | App 1 and 2 have 2 BTL properties in joint names | No |
| 3 | App 1 and 2 have 4 BTL mortgages held in joint names and are remortgaging one of these to Accord | Yes |
| 4 | App 1 and 2 have 2 BTL mortgages in joint names. They’re applying to us to purchase another property and they have an ‘in-flight’ application with another lender | Yes |
| 5 | App 1 and 2 have 5 BTL properties in joint names, 2 are unencumbered. Applicants are looking to raise funds with Accord on one of the unencumbered properties. | Yes |
| 6 | App 1 and 2 have 3 BTL properties in joint names which are unencumbered. They’re applying to us to purchase another property. | No |
We’ll assess the financial strength and competency of a portfolio landlord by taking into consideration their experience in the buy-to-let market, their full property portfolio and any outstanding mortgages along with their assets and liabilities.
Our existing rental calculations will apply for new borrowing. All background properties must collectively meet a minimum rental calculation of 145% interest coverage ratio (ICR) at a stressed rate of 5.5%.
In addition to our standard criteria, portfolio landlords will be required to supply details of any applications currently being processed with other lenders and complete an assets statement. We’ll also ask these landlords if they anticipate any financial changes or changes in circumstances which could impact the affordability of their portfolio.
Portfolio lending limits
Maximum portfolio lending
Maximum Group BTL exposure to an individual is £1,000,000 for a first time landlord and £3,000,000 for an experienced landlord.
Maximum total exposure - no limit to the total number of properties (max. 10 with mortgages).
Maximum number of Group BTL loans is 3 for first time landlords and 5 for experienced landlords.
Maximum properties in portfolio
We do not have a maximum number of properties allowed in a portfolio. However, no more than 10 properties in the portfolio can be mortgaged.
Is there a maximum LTV applied on individual units in the portfolio?
We won't assess the LTV on any portfolio properties, only the new loan being applied for. We'll look at LTVs in respect of the overall quality of an application.
Maximum LTV on portfolio
We don't assess the LTV at portfolio level.
Are inflight applications included in the total allowable number of portfolio properties?
No, we only count inflight applications when assessing whether the applicant is a portfolio landlord or not. Inflight applications will not count towards the total number of properties you are allowed and won’t be included in our rental calculation.
Background BTL portfolio
All background properties must collectively meet a minimum rental calculation of 145% interest coverage ratio (ICR) at a stressed rate of 5.5%.
How we assess coverage
When reviewing a BTL portfolio we do individually assess properties, but where an individual property in the portfolio doesn’t meet the 145% rule, but other properties in the portfolio would cover the shortfall, we do consider the portfolio as a whole.
Examples:
Strong Portfolio
| Property 1 | Property 2 | Property 3 | Property 4 | Property 5 |
|---|---|---|---|---|
| Self-financing 150% | Self-financing 146% | Self-financing 148% | Self-financing 140% | Self-financing 167% |
Whilst property 4 is not meeting the 145% rule, collectively the remaining properties are self-financing by 153%.
This is sufficient to cover the shortfall, pulling up the portfolio collectively to 150%.
Weak Portfolio
| Property 1 | Property 2 | Property 3 | ||
|---|---|---|---|---|
| Self-financing 145% | Self-financing 137% | Self-financing 148% | ||
The portfolio as a whole is not meeting the 145% rule, and whilst one property is above the required 145%, this is not by a substantial amount.
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