Buy to let mortgage on portfolio not passing income stress test

Capital Raised

This was a complicated case. Our client needed to reorganise their exit from a bridging loan with two refinances: a buy to let mortgage on the previous family home that wasn’t finding a buyer (below), and a residential mortgage arranged on their new home over a longer term than many lenders will consider for a late-40s borrower (more details here). 

The Scenario

A year previously we had arranged a 12-month bridging loan for our client: they had an opportunity to buy a very desirable family home at substantial discount, but their current home wasn’t on the market yet. The bridge was secured by a second charge on the previous family home, and a first charge against the newly purchased property. Their agreed exit was to be the sale of the former family home, valued at £800K.

When it came to the nine-month review point, our client was still confident that a sale could be achieved: she’s an experienced landlord, as well being the managing director of a care home.

But a buyer couldn't be found, and our client contacted us with just one month left to go on the loan term.

We needed to find some new options quickly, and proposed that our client let out the property that was proving hard to sell, refinancing with a buy to let mortgage.

There were a number of tricky issues that needed to be resolved.

Our client already owned three rental properties, so adding this fourth one to her book meant that she’s now classed as a portfolio landlord. Under the new whole-portfolio stress test requirements introduced by the Prudential Regulation Authority in 2017, the viability of each property in her portfolio needs to be established (not just the profitability of the new property she was seeking finance for).

The BTL mortgages she already had in place were all repayment mortgages (our client plans to have them cleared by the time her children finish university). She tops up the shortfall in rental income each month from her salary. But the portfolio would fail every standard stress test.

The Solution

We sourced a lender for the BTL mortgage who was willing to test her portfolio as though the mortgages were all interest-only – which it would be perfectly feasible to arrange on all the properties.

The assumed lower outgoings allowed the portfolio to pass the stress test. The BTL lending was secured at a good market rate for 5 years – on a deal most lenders would have said no to.

More about our buy to let mortgage service

Mathew Phillips

Finance Broker


0117 959 5094

Are you in a similar situation? I specialise in bridging finance at Clifton Private Finance - I will find you the best funding solution for your property transaction.

Alex Chambers

Senior Finance Broker


0117 403 4324

Are you in a similar situation? I am a specialist in residential and investment property finance for UK and international clients at Clifton Private Finance. Please don't hesitate to get in touch for a no-cost discussion of the finance you need.

Luther Yeates

Senior Finance Broker


0117 244 5561

Are you looking for a similar type of property finance? I have extensive experience finding residential and investment property finance for UK and international clients. Please get in touch and we can arrange a time that's convenient for you to discuss your situation.

Sam ONeill

Senior Finance Broker


0117 959 5094

Is your situation similar? I am a bridging finance specialist at Clifton. I can find a quick, cost-effective solution for the funding you're looking for.

Robert Gibb

Senior Finance Broker


0117 959 5094

Are you looking for mortgage or short-term finance for residential or buy-to-let property (including HMOs)? I have extensive experience in finding property finance solutions for UK and international clients, both as individuals and limited companies. Please give me a call and let me see what I can do for you.

Adam Arnott

Associate Director


0117 205 0214

Is your situation similar to this? I have extensive experience of advising clients who need creative property finance solutions. Please get in touch and we can arrange a time that suits you for a detailed discussion of your requirements.

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