Large Buy-to-Let Mortgages

It is fair to say that the large buy to let mortgage market has been one of the more volatile areas of the UK financial sector of late. While demand for rental property continues to grow, the UK government and regulatory authorities (Prudential Regulation Authority) have made a number of changes to protect market integrity. In light of the 2008 US sub-prime mortgage crash, the authorities initially reduced loan to value ratios and introduced a more stringent affordability test. We have also seen the announcement of tapered tax relief for landlords which could prove costly for high net worth individuals.

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Large Buy-to-Let Mortgages


There is no one-size-fits-all when it comes to million-pound-plus buy-to-let mortgages. You’ll find that personalised finance packages are most advantageous, and you’ll want to benefit from a solution that’s tailored to your income, assets and overall circumstances.

Over the past few years, many high street banks have taken a step away from non-traditional and very large buy-to-let mortgages, but there are still great deals to be found through these lenders. However, it's alternative lenders and private banks that can increasingly offer the most attractive terms and rates.

With access to more than 500 lenders, Enness has the contacts and experience to help you secure the optimum buy-to-let finance structure and negotiate the very best lending rates and terms available. Working alongside you as a trusted partner, Enness understands which of your assets and income streams to showcase to lenders, how to increase lenders’ comfort and how to reduce your financial charges wherever possible.

Applying for a Buy-to-Let Mortgage

Traditional Buy-to-Let Mortgages

Before looking at any commercial mortgage arrangement, you need to have a clear investment strategy and timescale. Are you looking to acquire new property or refinance an existing buy-to-let asset? Are you looking for a long-term arrangement, or is this maybe a short-term stepping stone to releasing funds in the future? There’s no right or wrong strategy, but your plans will influence which lenders it is best to approach and what type of finance package will suit you best.

If you are looking for a relatively “traditional” buy-to-let mortgage, you are likely planning to cover your mortgage payments with rental income. However, mainstream mortgage providers will usually still require proof of personal income as they look to find more comfort in lending to you. It’s important to note that most mainstream lenders will usually classify rental income from other buy-to-let properties as “uncertain.” As a result, you won’t be able to use this revenue to count towards your income, which lenders use to calculate affordability. If you have an extensive portfolio of properties (especially if you are a professional landlord), this can be challenging when you want to purchase a new buy-to-let property.

The specific requirements for a buy-to-let mortgage will vary from lender to lender, but the high street is broadly universal in this approach. However, alternative and niche lenders or private banks can be ideal alternatives, often offering a little more flexibility.

Bespoke Buy-to-Let Mortgages

It is vital that you find the right vehicle through which to undertake your investment journey and utilise existing assets to the full. Often, this means bespoke finance will be better suited to your needs than an off the shelf package. Enness has access to all the specialist buy-to-let lenders on the market. They cater to everything from very complex transactions to expat buy-to-let mortgages.

Specialist lenders can look at things differently from high street lenders and can consider more of your cumulative wealth and global assets as well as your short, medium and long-term income streams. Using Enness’ contacts and experience, you will be able to secure finance by cross charging assets, releasing equity elsewhere in your portfolio and prepaying interest. All of these will have a positive impact on your interest rate and the terms of your arrangement.

Purchasing Buy-to-Let Personally or Through a Company

In 2017, the UK government announced plans to gradually reduce the amount of tax relief investors could deduct against mortgage interest for buy-to-let properties. This phasing out was concluded in April 2020, and as of 2021, investors can no longer claim any tax relief on their buy-to-let mortgages. The rules apply to individual property owners rather than businesses that own property through corporate structures.

The introduction of the tax credit hasn’t dramatically changed the situation for basic rate taxpayers. While the calculation is different than under the old regime, there is little other variation in terms of the end financial outcome. If you are in the higher tax bracket, the situation is vastly different. The changes mean you will not be able to offset all your mortgage interest, and, as a consequence, you will pay a significantly higher tax on your net rental income. Increasingly, this is changing how investors are structuring their property ownership, increasingly considering corporate structures (usually SPVs and limited companies) over private ownership.

In the past, many individuals would own buy-to-let properties in their own name, potentially working with management or leasing companies to support them with day-to-day operations as required. However, with the end of the rules that allowed individuals to fully deduct mortgage interest from rental income, many investors are assessing how they hold property, especially if you have two or more rental properties. While individuals (or couples) can’t deduct mortgage income any longer, the rules are different for companies, and mortgage interest will still be classified as a cost when looking at company expenses and profitability.

Unfortunately, it’s not as simple as just setting up a company or special purpose vehicle to hold your property. While owning property through a company will give you a tax break, additional charges are associated with running a company, such as accountants, corporation tax, etc. As a result, corporate structures tend to be more beneficial if you have a more significant buy-to-let investment portfolio. Thinking carefully about what ownership structure makes the most sense for you is essential.

Enness’ team is always happy to talk you through your options and explain the benefits and drawbacks of buying through a corporate structure or personally owning buy-to-let property. It can be complex to understand – especially if you are buying your first buy-to-let property or are just starting out as a career landlord. If you have questions, if there’s anything you’d like to understand or want to know what your potential options are, reach out to a member of the team, who will be delighted to chat with you about your options.

Regulated and Unregulated Buy-to-Let

There are two specific types of buy-to-let funding: regulated and unregulated. A regulated buy-to-let mortgage (sometimes referred to as a family buy-to-let) revolves around a property:

  • That you will occupy at some point as an owner
  • You plan to let to a family member
  • Of which you own at least 40% (with the remainder let to third parties)

These can sound like unusual scenarios, but they are surprisingly common. Buying a property for children going to university in the UK, a retirement home you will live in later in life, providing accommodation for elderly parents, or house vulnerable or unwell family members is very usual. If you are an expat, you might also find you will be looking at a regulated buy-to-let property if you are purchasing a home that you plan to live in, in the future.

Unregulated buy-to-let mortgages – often referred to as investment property loans – are straightforward. These are mortgages available to landlords looking to buy property to rent out to third parties. The vast majority of buy-to-let funding in the UK is unregulated.

Unregulated mortgages are provided by high street banks, private banks or niche lenders.

Defining Features of a Buy-to-Let Mortgage Application

How Lenders Will Assess You

Lenders have very different ways of calculating affordability. As a result, there are significant differences in the way they will assess affordability for buy-to-let properties. The difference stems from the fact that high street banks and private banks/niche lenders are funded differently and have different risk appetites.

In most cases, lenders will calculate affordability by looking at your income, although some will consider your potential rental income. Lenders are usually looking to ensure that rent cover is at least 150%. They do this to ensure you can comfortably cover mortgage repayments in the event of short-term non-occupancy of the property. 150% rent cover is standard but can vary from lender to lender. Because non-occupancy can significantly impact cash flow, this “headroom” offers a degree of security to lenders and you as a borrower.

In addition, many traditional banks looking to lend money to buy-to-let investors have strict minimum income requirements of £25,000 a year. They often discount the rental income on the buy-to-let property (or properties) in question. The situation has changed a little recently, although many banks still insist on this minimum income.

Private banks and niche lenders are slightly different in that they will consider worldwide assets and various income streams when traditional banks can often struggle to do so. In some cases, Enness will even be able to arrange mortgages if you have zero regular income but significant assets, wealth and rental cover.

Rates: Short-Term Trackers to Long-Term Fixed

There is quite literally something for everybody when looking at the array of different interest rates available in the buy-to-let mortgage market. With the UK’s base rates currently so low, there is significant demand for short to medium-term fixed rates. Some buy-to-let investors have even gone as far as to secure their mortgage rate beyond the traditional five-year period to give them clearer visibility going forward.

In recent years, buy-to-let investors have been interested in tracker interest rates, which follow base rates plus a fixed margin for the mortgage lender. There are various options here, and you can follow UK base rates if you are buying in the UK, or European base rates if you are buying in Europe.

Ultimately, the rates you are offered will depend vastly on what you can bring to the table. The more liquid you are and the steadier your income, the more choice you will have. You will also have more options if you have a significant property portfolio valued in the tens of millions of pounds. One of the main benefits of such a large portfolio is the considerable cash flow and the use of paid-up properties for security/remortgaging opportunities. There are some extremely attractive fixed-rate mortgages available. As average rental yields are significantly higher than mortgage interest rates, there is usually potential to maximise your assets and increase income.

Whatever the size of your portfolio, circumstances or situation, Enness will be able to deliver the most competitive rates and terms on the market.

Property Portfolio Size

In theory, managing a portfolio of buy-to-let properties should be relatively simple, assuming everything goes to plan. However, the majority of buy-to-let investors will at some point experience difficult tenants, late payments, legal costs, and perhaps more importantly, time management challenges.

While each scenario is very different, as your property portfolio increases in size, this will present different challenges and time constraints along the way. In this scenario, the thoughts of many private landlords will move towards appointing a property management company to look after their assets. While there will be a management charge to consider, there is always a tipping point when a property portfolio becomes too much for one person to administer. As the regulations continue to tighten (often impacting profit margins), mistakes can be costly and place significant pressure on cash flow. Lenders don’t necessarily have a preference for borrowers using property management companies or personally overseeing rentals. However, they will want to know that you can keep a firm grip on your portfolio and handle the challenges that come with letting property with ease. If lenders potentially perceive that you are too close to the tipping point of finding it hard to manage, they may want more reassurance that you will consider working with a management company before they will let you borrow.

Ultimately, when, or even if, you should consider appointing a property management company will depend on your experience. However, if your particular skill set is identifying properties to acquire, then it may be sensible to focus on your strengths and employ the skills of third parties to manage your assets.

How Much Can You Borrow for a Buy-to-Let Mortgage?

The vast majority of Enness’ clients are high net worth individuals looking for multi-million-pound mortgages. Not every lender will have an appetite for such lending, especially for a rental property. However, many lenders will gladly let you borrow, although many will not openly publicise their services, instead operating on an introduction-only basis.

In theory, there is no upper limit on what you can borrow for a buy-to-let property. You will need to approach lenders with a logical plan and be able to evidence that there is a rental market for your property. The higher the monthly rent, the closer lenders will look at how you will cover mortgage repayments were the property to lie empty.

It is critical to know which lenders to approach and what will give them comfort for a high-value buy-to-let mortgage. However much you want to borrow, Enness will be able to source and negotiate the best deals.

Large Buy-to-Let Lenders

If you need a high-value mortgage for a buy-to-let property, you will most likely be best served by private banks and niche lenders. Generally, they will offer you more flexibility and more advantageous terms than high street banks, although it’s important not to overlook the latter altogether. Traditional lenders can still offer very competitive finance packages, but these tend to be for very plain vanilla deals where you have sufficient regular income to cover mortgage repayments (which, by extension, fits with the new affordability calculations introduced by regulators). As a consequence of Enness’ long-term relationships with many traditional banks, there is a greater degree of flexibility when instigating face-to-face negotiations. So, while most multi-million pound mortgages still tend to be the domain of private banks and niche lenders, this is not always the case.

High Street Banks

High street banks in the UK are funded very differently to other lenders. Consequently, they have experienced a tightening of regulations and the introduction of affordability calculations to reduce the risk profile of the financial markets. There is a degree of flexibility for bespoke arrangements, but in some cases, there are restrictions on how far the high street banks can go.

Specialist Lenders

Specialist lenders are a vital part of the UK mortgage market, often offering those with non-traditional finances the opportunity to secure mortgage funding. As with their private bank counterparts, they tend to take a more rounded approach when it comes to borrowers with multiple income streams and global assets. Many will also be open to international finance requests, which may be challenging for other lenders. Despite the specialised nature of these groups, they will still accommodate vanilla mortgage funding applications.

Private Banks

Private banks have become the first port of call for many non-traditional mortgage funding applications. Most private bank mortgage funding agreements tend to be bespoke, which is usually likely to benefit you as it will be tailored to your requirements. Comparing headline interest rates with high street bank mortgages is often akin to comparing apples and pears: a slightly higher interest rate can often come with significantly more flexibility, better terms and other advantages.

Private banks have become extremely popular with high-net-worth individuals looking for a buy-to-let mortgage and who may also be looking for additional wealth management services. These lenders can offer extremely attractive, often subsidised, headline mortgage interest rates to tempt customers. In return for these rates, many mortgage arrangements will also involve the transfer of additional investments to the bank’s asset management division – a loose form of security.

Where other lenders can be focused on rigid underwriting and risk tests, private banks are usually more flexible. You will usually be able to put forward global assets and multiple income streams as collateral for a buy-to-let mortgage.

The majority of private banks tend not to publicise their services openly, and as a consequence, many remain “invitation only”. Enness can approach private banks you would not be able to access through traditional contact routes.

Bridging and Short-Term Lenders

You may wish to acquire a buy-to-let property that you will renovate or upgrade before renting it out. As a consequence, bridging or short-term funding is often used to finance the cost of the work. Later, you can remortgage the property at a higher value. Short-term finance of this nature can last anywhere between 24 hours and three years, and interest rates will reflect this.

If you want to pursue bridging finance and later remortgage your buy-to-let investment, Enness’ team may suggest that they arrange the remortgaging deal at the same time as bridging/short-term finance. Doing so ensures repayment of the short-term finance as quickly as possible and re-bases the debt on a more traditional mortgage interest rate. For their part, bridging finance lenders will usually be happy to know that you have a solid exit plan.

Peer-to-Peer and Alternative Lenders

The last few years have seen an explosion in property funding provided by peer-to-peer platforms (otherwise known as crowdfunding). While not always suitable for bespoke buy-to-let mortgages, they offer a viable alternative for vanilla funding requirements. The fact that the transaction is on a peer-to-peer basis effectively removes a layer of charges which is usually reflected in the overall cost. On the downside, peer-to-peer funding of property transactions offers limited regulatory protection at this moment in time.

International Banks Many - but not all - banks are willing to lend to expats and international investors. As with many high-value mortgages, most deals from these lenders are not generally promoted to the broader public. Here, introductions are essential, and working with a team like Enness that knows which banks can work with expats or facilitate international investments will go hand in hand with a quick and effortless deal. This is where Enness makes full use of our numerous contacts in the market to arrange vanilla or bespoke buy-to-let mortgage funding.

Special Situations

As your property portfolio grows, you will see special situations arise that will require a tailored approach. Whether looking at rental income, property values or redevelopment, you will want to be aware of the best means to maximise buy-to-let lending and minimise costs.

When Rental Income Doesn’t Cover Your Mortgage: Top Slicing

The buy-to-let mortgage lenders who consider rental income will have a set cover ratio. On average, this works out at around 150% (boiled down to the most basic maths, if you need to pay £1000 in monthly mortgage payments, the lender would need to see at least £1500 in monthly rental income).

Top slicing is used when there is a shortfall in rental income, and the ratios (which vary from lender to lender) are not met. In this scenario, the lender will consider your personal income and any potential surplus in addition to other factors. Each lender will have a different calculation and way in which they view surplus income. The idea is that part of this surplus income would be committed to the repayment of monthly mortgage liabilities – effectively covering the rental income shortfall. However, there can be issues if you have a large portfolio as the lender may need to recalculate affordability, top slicing included, for all properties you own.

Letting A-Main Residence When You Buy Another Property

You may wish to rent your current main residence with the intention of buying another property. If you want to do so, there are several factors to take into consideration. If you have an existing mortgage on a property you wish to switch to a rental property you let out, you will need to inform your mortgage provider. There are legal and subtle differences between residential mortgages and buy-to-let mortgages, and lenders will take a different approach to this type of switch.

If your current primary residence is paid up in full and you don’t have a mortgage, you can either remortgage your home or take out a mortgage on another property. With no outstanding mortgage, future rental income could be used in tandem with regular income to increase borrowing potential for a mortgage on another property. It is certainly worth taking advice on how best to utilise the original property asset to minimise the interest rate on any new mortgage funding. There is also the issue of increased stamp duty on a second home purchase which may present the option to use a company structure to house one or more properties.

Redeveloping Properties Before Renting Them

Short-term finance (usually known as bridging loans) are beneficial if you want to develop or build a property. For these kinds of projects, your lender will usually stagger the release of payments. When pre-agreed milestones are met on the build or development, the lender will ensure the work has been carried out and will then release funds to finance the next stage of work. Staggering payments in this way is beneficial for you as you won’t pay interest on all funds for the entire term of the loan, and at the same time, the lender’s risk is reduced if you don’t complete work on time or if you run over budget.

What does this look like practically, and how is it advantageous to you?

  • Let’s say you have a mortgage on a property valued at £2 million that you later want to rent. You take out a bridging loan of £500,000 to cover redevelopment/building work that will increase the property's value.
  • After the redevelopment/rebuild work, you’ve increased the value of your property to £3.2 million, essentially creating an additional value of £700,000.
  • You use this new finance to pay off the original mortgage and the bridging loan. You can then go on to remortgage the property based on its new value. You can use any additional funds raised through the remortgage to reduce the LTV (thereby decreasing the headline interest rate) by retaining equity within the property or for other investments.

High-Value Buy-to-let Property: Mortgages Over £3 million

If you need a three-million-pound-plus buy-to-let mortgage, the best way to maximise funding and reduce headline interest rates is to utilise all your income streams and all assets. Traditional buy-to-let mortgages tend to require an initial deposit of around 25% of the property value. However, Enness may be able to negotiate how much you have to put forward.

Often private banks or niche lenders have more desire to lend against high-value rental properties and will require lower deposits if you transfer assets to the asset management division of the lender. As well as offering more flexibility than high street creditors, private banks and niche lenders will most likely be Enness’ first port of call for negotiations if you have a more complicated situation. Multiple income streams and assets dotted around the globe are the norm for many high-net-worth individuals, but many (traditional) lenders will struggle to be able to utilise global assets or unusual income to offer you a competitive rate. For their part, private banks and niche lenders are more flexible. They can create bespoke arrangements taking your current and future income, assets and plans for the future into consideration.

However, high-value buy-to-let mortgages aren’t only served by private banks and niche lenders. If you have a non-complex transaction, you may find that mainstream banks can offer you an attractive mortgage that meets all your needs and can be highly competitive when compared to other types of lenders. To this end, Enness has extremely strong relations with many of the UK’s high street banks. Your broker will know what kind of scenario these banks can serve and exactly which lenders will offer the best deal. If you have the right circumstances, Enness will be able to negotiate very competitive finance from high street banks.

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Contact Enness

Whether you are thinking about buying your first buy-to-let property or if you are a professional landlord adding to your portfolio, give Enness a call today to discuss your situation in more detail. Enness’ expert team of buy-to-let brokers will be able to advise you of your options and current rates on the market.