Portfolio mortgages: the pros and cons?
July 24, 2024
Portfolio mortgages: the pros and cons?
If you own multiple mortgaged investment properties, you’ll face a crucial decision: individual mortgages for each property or a single mortgage covering your entire portfolio. Let’s explore the pros and cons to help you make an informed choice.
Pros:
- Streamlined Process: With a portfolio mortgage, you’ll submit only one application and handle a single set of legal work. This efficiency can significantly reduce processing costs.
- Aligned Expiry Dates: A portfolio mortgage aligns all product expiry dates to a single date. This simplifies administration and ensures smoother management.
- Simplified Administration: Enjoy the convenience of a single direct debit payment per month and a unified renewal process for all properties in your portfolio.
- Holistic Affordability Assessment: Lenders evaluate affordability and loan-to-value (LTV) ratios across your entire portfolio. This approach can benefit lower-yielding properties by considering the overall picture.
- Favourable Terms: Some lenders offer better terms for a single, larger loan compared to multiple smaller loans.
Cons:
- Potentially Higher Interest Rates: If you own fewer than four buy-to-let (BTL) properties, be aware that interest rates on portfolio mortgages may be slightly higher.
- Property Sale Considerations: Selling a property from your portfolio requires coordination with the lender. You’ll need to arrange its release from the portfolio.
Remember, deciding whether to consolidate your mortgages into a portfolio is complex. Take the time to weigh your options carefully before making a choice.
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