Three mortgage numbers every portfolio landlord should know.
When your next fixed rate ends and what the revert rate costs, your interest cover at the stress rate, and how much of your borrowing sits with one lender.
There are three mortgage numbers every landlord running a portfolio should be able to answer without looking anything up. Here they are, with the arithmetic behind each one.
1. The next fixed rate to end, and what it reverts to
A fixed-rate buy-to-let mortgage normally moves to the lender's stated reversion rate when the fixed period ends, unless a new product or refinance is in place. Record the date and the reversion rate from the mortgage offer. Do not rely on a market average.
Take a £120,000 interest-only mortgage.
That is £200 a month for doing nothing other than missing a date. Five mortgages with the same balance and rate change would cost £12,000 a year. The figures are illustrative. The reversion dates and rates in your own mortgage offers are not.
2. Interest cover at the stress rate
Lenders test whether the rent covers mortgage interest with a margin. This is the interest cover ratio, or ICR. The required percentage and the stress rate vary by lender, product and borrower, so use the figures in the lender's current criteria.
On the same £120,000 mortgage, monthly interest at a 5.5% stress rate is £550.
That does not make the property bad. It shows how one lender's test can pass while another's fails. Work the ratio out at the relevant stress rate before speaking to a broker, so you know which properties have fewer refinance options.
3. Lender concentration
If four of your five mortgages sit with the same lender, one change of policy affects most of your borrowing at once. Lenders change property-count limits, loan-to-value rules and portfolio criteria, and a single change can take out a large part of the refinance plan.
Concentration is not automatically wrong. A second lender may cost more or offer worse terms. Record the exposure and ask the broker to price the flexibility, rather than applying a fixed lender-count rule.
Keeping them current
None of these numbers is hard to work out on its own. The hard part is keeping them current across every property and every mortgage, so the answer is there when you need it rather than rebuilt from a spreadsheet under time pressure.
Lar tracks the fix-end dates, the interest cover at the stress rate and the lender concentration, and tells you when one of them needs your attention.
See the next fix ending before it becomes urgent.
Lar watches every fix-end date, tests interest cover at the stress rate and shows lender exposure across the portfolio.
Rates move and the figures above are illustrative; a broker will test them against your circumstances. This guide is general information, not financial advice.