Affordability checks and buying 4th property

[Landlord Dave]

Hi All

Two questions:

Affordability Checks (Remortgage)
When remortgaging BTLs, to what extent do savings contribute to a positive outcome with affordability checks, or do lenders not factor them in at all? Say you're in full-time secure employment, have a residential mortgage and 3 x BTL mortgages (all properties tenanted) and are in the black each month, do savings help in getting approval? I have a not insignificant sum lying in the bank doing nothing. I'm considering buying a 4th BTL outright, however this will pretty much wipe out my savings. I have a remortgage due on one of my properties this summer and don't want to jepordise a positive decision from the lender. Therefore, should I be leaving my savings where they are to ensure this?

Buying a 4th BTL
When I review lender criteria, many of them say they accept applications from landlords with up to 3 BTLs. To go over this, you need to go down their business/company route. I'm not interested in doing this. Am I right in thinking lenders will still consider you (without being a registered business/company) if you have more than 3 properties, as long as only up to 3 are mortgaged? e.g. if you own a 4th, 5th but they are owned outright, does the lender essentially ignore them in terms of assessing your application?

Thanks

[Gordon999]

If you have 4 or more mortgage properties, you are classed as a BTL portfolio investor and may be subject to assessment under portfolio rules. It should not affect you if you are limiting yourself to 3 mortgaged properties.

https://www.mortgagesforbusiness.co....es-can-i-have/

If your BTL property in summer requires a high LTV re-mortgage, then it may be better to delay outright purchase of 4th property.

[Landlord Dave]

If you have 4 or more mortgage properties, you are classed as a BTL portfolio investor and may be subject to assessment under portfolio rules. It should not affect you if you are limiting yourself to 3 mortgaged properties.

https://www.mortgagesforbusiness.co....es-can-i-have/

If your BTL property in summer requires a high LTV re-mortgage, then it may be better to delay outright purchase of 4th property.

Thanks. I reckon the LTV will be in the region of 65-70% depending on valuation at the point of remortgage. Given I've just started toying with the idea, I reckon you're right. Hang fire until remortgage complete then look to purchase thereafter.

[jpucng62]

I have several mortgaged BTLs and some owned outright. The numbers have not been a problem to date with mortgages although I have to use different providers as often a mortgage holder will only allow a certain number of properties from one LL. eg I think Birmingham Midshires only allow you 3 mortgages with them but that den't stop you borrowing from elsewhere.

[loanarranger]

As a Portfolio Investor there are only two main criteria on which a lender will base a loan assessment:-
1) Minimum Earned Primary Income , each lender has a minimum base salary requirement.
2) Is the rental adequate to meet the loan requirement based on the stress rate , which can vary depending on initial term of the mortgage incentive.
3) Portfolio Of Properties where the overall borrowings will be assessed against the total gross rental using the portfolio rental stress rate which is higher than the individual rental stress calculation.

If the applicant meets these base criteria then the normal underwriting checks are made, Self Assessments, Tax Overviews and Tax Calculations for a minimum of 2/3 years
Bank Statements showing receipt of rental payments, or Rental Statements to show rental monies received by Managing Agent less associated fees etc.
There will be other requirements including showing the evidence of the deposit monies which are needed.

[Landlord Dave]

As a Portfolio Investor there are only two main criteria on which a lender will base a loan assessment:-
1) Minimum Earned Primary Income , each lender has a minimum base salary requirement.
2) Is the rental adequate to meet the loan requirement based on the stress rate , which can vary depending on initial term of the mortgage incentive.
3) Portfolio Of Properties where the overall borrowings will be assessed against the total gross rental using the portfolio rental stress rate which is higher than the individual rental stress calculation.

If the applicant meets these base criteria then the normal underwriting checks are made, Self Assessments, Tax Overviews and Tax Calculations for a minimum of 2/3 years
Bank Statements showing receipt of rental payments, or Rental Statements to show rental monies received by Managing Agent less associated fees etc.
There will be other requirements including showing the evidence of the deposit monies which are needed.

Thanks. So in theory, if I have £100k, £50k or £5k in the bank, this makes no odds to the lender in their calculation? This is good news for me when I decide to invest my savings later this year. In my naivety, I thought savings would count as a positive as it shows you have a cushion e.g. should rental income drop. Mind you, I suppose they can't really base anything on savings as you could go out the next day and splash it all on a new car!

[loanarranger]

Evidence of personal savings is not an integral part of the loan assessment process but as you correctly assumed it does indicate that the borrower does indeed have a safety buffer should the portfolio experience extended voids. A number of lenders experienced in portfolio lending do ask in the business plan what level of contingency funds are set aside for such instances of voids and essential repairs.
Best ofluck going forward.