The growth in the buy-to-let market has meant there are increasing numbers of individuals following a deliberate policy of building property portfolios, principally as a supplement to traditional pension provision. It does not require the purchase of a particularly large number of properties before total mortgage commitments begin to approach £1m and so it is essential all their mortgage costs are kept under review by taking advantage of remortgage opportunities across a variety of lenders.
Most high street lenders cap their buy-to-let lending to individuals at £500,000, but below this level many will have well-priced fixed, discount and tracker rates available. To find lending above this level it is necessary to go to the specialist market and even here the choice reduces dramatically above £1m. Two lenders whose published criteria clearly place them in this market are Paragon Mortgages and The Mortgage Business.
Paragon will lend up to 75% loan to value to £2m on an unlimited number of properties. Pricing will be based on a Libor tracker, although sometimes there are fixed rates available.
The Mortgage Business will lend up to 85% loan to value to £2.5m on their Ten-to-Let scheme. The maximum exposure on each property will be £250,000 and the pricing will be set at 2% above bank base rate.
One of the key strengths of Paragon is its acceptance of limited companies as the vehicle for the transaction, which enables property investors to manage their tax position more effectively ‘ something that will be important with £1m of lending secured on assets of £1.5m or more. This limited company facility is being actively considered by a number of lenders in response to the demand for portfolio finance.