So how are you all this last Friday of lockdown? I’m sure there will be mixed feelings across the country as we all come to terms with the new tiers we have been placed in. With that and all the Christmas news this week it’s a lot to digest.
This week has been a bit of a crazy one for Baya, last week of the month, in a month where everything seems to be taking extra time, so then everything becomes urgent. We are seeing a good volume of business though, which is great – long may it continue!
This week I’m talking about portfolio financing. This is something that I think gets a bit of a bad reputation as being expensive, but there are so many advantages and it isn’t as expensive as you think. The cost of limited company buy to let’s and HMOs, as well as personal buy to let’s where there is a portfolio in the background is creeping up; we are generally looking at about 3.5-4% for 75% loan to value on an individual loan for each house. As a comparison, we can get under 4% for an equivalent loan with a bespoke portfolio refinance, so not really that high any more.
So why would you choose a portfolio loan?
- As your portfolio grows, the time it takes you to source and refinance each remortgage goes up. How long does it take you to refinance each property and what else could you be doing with this time? Looking at properties separately means providing documentation each time which can be very time consuming. Especially when they are spread out throughout the year.
- Using one specialist lender for a whole portfolio means that we can often negotiate a lower rate. A few lenders are now looking to compete with high street rates, but with the speed of specialist. They are also generally happy with interest only at a higher loan to value too.
- There is only one legal fee and arrangement fee. Completing the legal work in bulk is less costly, you will only need one appointment for legal advise and to sign the documents. This means you’ve only got to do it once in 5 years if you want to!
- Building a track record with a lender is great when you want to buy more properties. When they can see your conduct it does make further lending easier and there is less required from you.
- If you have some low value properties (under £75,000 generally) or low yielding properties that you can’t maximise the refinance on their own, putting them into a portfolio can help. They can rely on other higher value or yielding properties and lenders will often allow you to add on security which wouldn’t be suitable if it was on its own.
We can often use a desktop valuation rather than a visit from a surveyor. This is great at the moment; it means you don’t need to worry about booking appointments with tenants, but more importantly you don’t have the added worry of a person’s opinion as we are using only factual comparables. In this market I think that this is a huge advantage.
At a time where there are opportunities out there for cash buyers, a refinance to raise capital may seen appealing too. Perhaps an area you hadn’t thought about… ?
We are happy to take a look at your portfolio and see what the options are for you.