"The mortgage market has moved decisively back in favour of portfolio landlords, but the gap between best-in-market rates and legacy rates that landlords can fall into through lack of research or professional funding support is now dangerously wide"
- Alasdair McPherson - Rangewell
Recent research from property finance specialist Rangewell reveals that buy-to-let (BTL) portfolio landlords who do not refinance could face a £23,000 increase in mortgage costs over two years. This contrasts with the potential £8,500 savings available due to recent improvements in mortgage rates.
Rangewell examined the average mortgage borrowing held by portfolio landlords and compared the current benefits of refinancing at the end of a typical two-year fixed term against the costs of failing to act and reverting to standard variable rates.
Two years ago, the average portfolio landlord held 8.6 BTL properties financed across 5.8 loans, with total borrowing of £503,680. At that time, the average two-year fixed-rate mortgage product at 75% loan-to-value (LTV) carried an interest rate of 4.78%. This meant monthly interest-only repayments of approximately £2,006.
Today, mortgage rates for the same product type have dropped to an average of 3.93%. Landlords who refinance proactively at the end of their fixed term could see their monthly interest-only payments fall to £1,650. That represents a monthly saving of £357, or £8,563 over two years.
On the other hand, landlords who do not refinance and instead move onto a standard variable rate could see their mortgage interest rise to 7.09%. This would increase monthly repayments to £2,976, an additional £970 per month or £23,270 over two years.
Alasdair McPherson, head of partnerships at Rangewell, highlighted several refinance and re-leveraging opportunities in several specialist sectors:
Semi-commercial properties, such as flats above retail units, have seen increased lender appetite. Refinance terms for mixed-use portfolios often improve on those available to pure residential portfolios, especially where retail yields offset any residential drag.
Holiday let portfolios, traditionally subject to strict underwriting, now attract more lenders. Refinancing can reduce costs and unlock equity for further purchases.
Supported living and social care portfolios were once difficult to finance, as many lenders did not understand the model. A growing number of specialist lenders now offer better refinance and expansion options.
Foreign investors with UK property portfolios faced higher rates due to lack of UK credit history. More lenders are recognising this asset class and offering competitive terms, enabling better portfolio positioning.
HMOs (houses in multiple occupation), especially professional and student HMOs with strong rent-to-loan coverage, now benefit from strong lender demand. Landlords can often secure rates comparable to standard BTL mortgages, resulting in significant savings.
Multi-unit freehold blocks (MUFBs), typically five or more self-contained flats under one title, remain popular with lenders. With solid rent rolls and valuations, landlords can secure competitive rates even at scale.
“The mortgage market has moved decisively back in favour of portfolio landlords, but the gap between best-in-market rates and legacy rates that landlords can fall into through lack of research or professional funding support is now dangerously wide," said McPherson, adding "For portfolio investors, this isn’t just about individual savings – it’s about managing cash flow on a property-by-property basis, leveraging equity to grow the portfolio, and avoiding thousands in unnecessary cost.”
