How Many Buy-to-let Mortgages Can You Have as an East London Landlord

How many buy-to-let mortgages can you have at the same time? It’s a question most landlords will be asking if you plan to build your portfolio.

While you don’t need a buy-to-let mortgage for renting out a property, a high percentage of Newham and Redbridge landlords choose this route. Over half of England’s landlords start out with a property bought expressly to rent out, as opposed to their former home or an inherited house, according to the government’s English Private Landlord Survey 2021. Of those landlords, 75% start their property portfolio with a mortgage.

However, many landlords have plans to expand further. Whether you’re making plans to invest in a string of buy-to-lets in Stratford, or preparing to buy your first rental property in Gants Hill, read on.

Read on, as we answer your questions about how many buy-to-let mortgages you can have.

What are buy-to-let mortgages?

Most buy-to-let mortgages work on an interest only basis, whereby landlords only pay the mortgage interest each month, then settle the full mortgage balance at the end of the term. Interest rates are normally higher than residential mortgages, and average deposits on a buy-to-let mortgage can be around 25% to 40%.

Keep in mind that you can’t live in the property – this would breach the terms of your buy-to-let mortgage agreement. It is a landlord’s responsibility to have the right mortgage.

How many buy-to-let mortgages can I get?

How many buy-to-let mortgages you can have will be decided by your lender, there’s no universal rule. Expect them to consider your finances and experience as a landlord, the number of properties you currently own, and their rental potential.

If you’re new to buy-to-let investment, you may need patience as you work towards becoming a portfolio landlord (a landlord who owns 4 or more properties). Lenders tend to limit the amount you can borrow and the number of buy-to-let mortgages for first-time landlords.

Can a first-time buyer get a buy-to-let mortgage? It’s possible, though some lenders may refuse and others will usually set stricter criteria. To qualify for a buy-to-let mortgage as a first-time buyer, you may need to show that you can generate a higher rental income, provide a larger deposit and pay higher interest rates.

How to be accepted for multiple BTL mortgages

Buy-to-let mortgages present a higher risk than a residential mortgage, so the acceptance criteria is more stringent. While the exact acceptance criteria for buy-to-let mortgages will depend on your mortgage lender, how much you can borrow will usually depend on:

• Good credit history
• Existing homeowner
• Over 25 years of age
• Projected rental income covering 125%, 130% or as much as 150% of the mortgage payments
• Loan-to-value (LTV) ratio of 75% or more

Is it a good idea to have multiple BTL mortgages?

Major lenders have cut buy-to-let mortgage rates recently, as outlined by This is Money, but is expanding your buy-to-let property portfolio right for you? Property investment calls for a longer-term view, and being accepted for a mortgage is just part of the picture. You must consider the risks as well as the possible rewards. Here are some of the pros and cons to think about before taking out multiple BTL mortgages:

Pros

• Potential to generate higher monthly rental income.
• The chance of a larger return on your investment through capital gains if your properties increase in value.
• You may spread the risks with multiple sources of rent payments.
• Benefit from economies of scale.
• Property management services can alleviate the additional workload.

Cons

• You could pay more tax – stamp duty land tax on each additional property when you buy, and capital gains tax when you sell
• More time and effort to manage.
• Repair costs are multiplied.
• Potentially covering mortgage repayments and bills during void periods across multiple properties.
• Higher risks if the market doesn’t work in your favour.

Do I need a buy-to-let mortgage?

Unless you already own the property outright, you will need a buy-to-let mortgage if you plan on renting to tenants. If you have a residential mortgage, perhaps if you’re an accidental landlord, you can often change your mortgage to buy-to-let so speak to your mortgage lender.

Always consult a professional financial advisor to understand the full financial impact, legal and tax implications and other aspects. However, we hope that this article has answered your questions and given you food for thought as you explore your options.

If you are a landlord in Ilford, Romford or Grays, we will be glad to discuss how we can support your growing portfolio. Contact Lint Group today.

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