Being a landlord

Rising property values and a booming lettings market has meant that many lenders have developed mortgage deals tailored to the needs of would-be landlords.

If you are a landlord letting out more than four properties, lenders will consider you to be a ‘portfolio landlord’

New affordability rules were introduced in 2017, which mean that portfolio landlords need to meet specific affordability rules for all properties they own, rather than the overall affordability of their portfolio, when applying for new finance.

However, some lenders use a method called 'top-slicing' when assessing your application. This allows the lender to take into account any additional income you have, apart from rental income, when they calculate what they are willing to lend you. Top-slicing is unlikely to be appropriate if you have little in the way of disposable income or savings and therefore do not have income to cover unforeseen events.

If you are already a portfolio landlord or you are aiming to grow your property portfolio, you could consider a portfolio mortgage which allows you to have the whole portfolio under one mortgage.

Many landlords now operate as a limited company for the purposes of buy-to-let (BTL). Operating in this way will have some financial benefits but is likely to restrict the choice of mortgages available.

With a reduced range of products, you need to choose the mortgage that is best for you. This isn’t just a question of opting for the lowest interest rate and cheapest monthly repayments. Like residential mortgages, buy-to-let mortgages need to be compared in terms of any extra fees that may be applicable, as well as additional benefits they offer.

Consulting an experienced, impartial mortgage adviser is advisable as they can provide expert advice on which product is best for your needs.

Being a landlord also comes with responsibilities to ensure both you and your tenant are protected. Speak to Lime about:

  • Landlords cover
  • Buildings cover
  • Tenant cover

A Buy-to-Let mortgage will be secured against your property. The Financial Conduct Authority does not regulate some forms of Buy-to-Let mortgages.