Frequently Asked Questions – Portfolio Buy-to-Let

Please follow this link for our affordability calculation for Portfolio Buy to Let mortgages.

Once you’ve logged into Mortgage Pro, Portfolio Manager on your homepage can help you see if the applicants portfolio meets our interest cover ratio (ICR) and stress rates. After uploading the applicant’s portfolio or creating one from scratch, Portfolio Manager will provide a summary of the total interest cover ratio that is automatically stressed at 5.5%.

Alternatively, you can calculate this manually using the steps below:

Step 1: Calculate the annual stressed interest of the portfolio

Total the applicants existing mortgage balances (including any mortgage balances subject to applications) and multiply this by 5.5%.

E.g. Total mortgage balance = £200,000.

£200,000 x 5.5% = £11,000 per year.

Step 2: Apply the ICR of 145%

Using the annual stressed interest of the portfolio in step 1, you’ll need to multiply this figure by 145% to calculate the required yearly rental.

E.g. £11,000 x 145% = £15,950

Step 3: Convert the ICR calculation to the minimum monthly rental

Using the calculation in step 2, divide the total by 12 to work out the monthly rental amount required.

E.g. £15,950 ÷ 12 = £1,329 minimum rental required per month

Up to 25% of the total rental income from background portfolio can come from HMO/Holiday let properties, none of these properties to be mortgage with TSB. Our rental assessment of these properties will assume a standard let. The 25% allowance is based on the total HMO/Holiday let rental income received and not the number of properties in the background.

For portfolio buy to let applications we ask that you key all the applicant’s residential mortgages as existing mortgage commitments, as well as any mortgages which are subject to applications with TSB. This includes any future mortgages if the applicant is capital raising for a deposit on a property, you will also need to key any parallel/simultaneous applications with TSB under existing mortgages.

No, commercial properties don’t count towards the maximum number of mortgaged properties for portfolio buy to let applications.

Multi units are acceptable as part of the applicant’s background portfolio. We count these properties by mortgage, i.e. unit split into 3 mortgages counts as 3 mortgaged properties towards the portfolio. We will base all rental values on the units themselves and not the rolled up value of ground rent or service charges on top of which the applicant would be in benefit of as the freeholder of these properties.

If the applicant is raising money for an onward purchase of their 4th BTL, we this to be keyed as a standard BTL application. Please answer ‘No’ to the question ‘On completion of this application, will the applicant(s) own four or more mortgaged Buy To Let properties?’ at case creation.

You will need to key the details of the mortgage linked to the 4^th BTL property into the existing mortgages section of the application, if the details are unknown then an estimate should be keyed.

For further support with these applications please contact your business development manager.

Yes, where the future property details are unknown, we ask that a reasonable estimate of what the mortgage detail and running costs (where applicable) will be. This needs to be keyed into the existing mortgages section of the application.