Marcus approached AALTO looking to acquire three properties in a short space of time. Marcus already had a residential property and two BTLs under his belt. At the end of the project, Marcus would be classed as a portfolio landlord – the definition being anyone who owns four or more buy-to-lets on completion.
The problem we faced is that, under current portfolio rules, BTL number 3 would be assessed under the old rules – meaning that only the subject property would be considered in the application. The other two properties however, BTLs numbers 4 and 5, were going to fall under new the rules. These dictate that the whole of the portfolio and client’s financial situation is assessed against each property.
This led to a unique problem. When we arrange a mortgage for one property, that then becomes part of the portfolio, and might invalidate certain mortgages going forward. It’s a delicate balance. Clients want to make their money go further but also ensure that their access to finance is not limited.
To tackle this problem, we built a fully customised spreadsheet that could predict future assessments depending on how Marcus’s portfolio was due to change. By mapping his proposed purchases, we could easily see how each lender would consider the existing portfolio at each stage, and most importantly what they would lend going forward for new projects.
By preparing in this way for acquiring BTLs in quick succession, portfolio landlords like Marcus can easily see what their average rents need to be to meet lender criteria. They can also balance portfolios between high-yielding but low-growth properties and vice versa, staying on the right side of lender thresholds so they never find themselves unable to get good value finance.
At AALTO we know that holistic advice on BTL strategies is what our clients value the most about us. We don’t just pick mortgages, we understand your objectives and your existing portfolio, and intelligently steer you through the regulatory minefield. Call us on 0207 183 1101 or contact us here to see how we can help you.
This case study was specific to this client and your situation and circumstances may be different. You should always seek advice specific to yourself.
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