Most buy to let mortgage deals run for 2/3, years at the end of which time, you can re-mortgage if you are looking for a better deal or to release funds that you can use as a deposit to purchase other properties. The restriction here is that you are locked into a lender for normally at least two years, and if you want to get out in the interim you will be paying an early redemption penalty.
There are one or two schemes that will allow you to have a plan that does not have any early redemption penalties, but the interest rates are higher and the loan to value maybe 5--10% less than standard schemes.
This is where a portfolio scheme has the advantage over standard schemes in that all of your properties are under one roof, normally up to ten with one lender, and the increase in equity each year in a normal market would allow you to use that equity to purchase further property. The total rental income from the properties would be averaged across the whole of the portfolio and in most cases allow you as the client to borrow more than taking each property as an individual case and testing the rental income against the mortgage interest payments by a given margin.
A portfolio scheme will allow you to grow your property portfolio far quicker and with much less fuss and expense that having your properties with various lenders and having to re-mortgage each one to enable you to release funds.
The choice of lender is critical if you want to maximize your growth potential, and seeking the right advice from a commercial mortgage broker or an Independent Financial Adviser who can guide you to the right lender and plan would be a very wise move.
UPDATED 20/01/2009
In the last 18 months many clients that had taken the decision to keep their buy to let properties within a portfolio may have faired a little better than those clients who have spread across many lenders. You cannot avoid the drop in property values, but its effect may not have the same impact when spread across the portfolio and may still leave room to take advantage of this wonderful buyer's market place.
Those lenders who are still active would much prefer to lend to the experienced investor who will not panic when the going gets tough, but see it as an opportunity to expand the portfolio and go for growth when the situation allows it..
Every day we are hearing all the messages of doom and gloom, all of which we understand, but someone else's loss is some ones gain. This may sound very mercenary but this is part of life, and when the opportunity comes along you should grasp it, because if you do not someone else with more knowledge and experience will do exactly that.
If you want to know more call Michael Alexander 0845 2 605506.
