Homeowners Miss Out on Portfolio Consolidation


“Ultimately, portfolio owners benefit from working with partners who truly understand their business and can help them get the most from their investments.”

For many homeowners, 2021 has been a time of buying activity. The possibility of saving thousands of pounds, thanks to the stamp duty holiday, has tempted a significant number of professional investors to add to their portfolios.

Research conducted earlier this year by FJP Investment suggested that up to 44% of investors plan to buy a property in 2021. This is particularly noteworthy given that the majority of those polled said they felt the government had unfairly targeted buying space for rent, and that real estate investing had become less attractive over the past five years.

Clearly, even with these concerns, the prospect of circumventing stamp duty when purchasing investment property has been appealing.

However, the stamp duty holiday is almost over. The first phase was completed in June, and from September it will be completely phased out, with tax rates returning to previous levels. This gives homeowners and their mortgage brokers the opportunity to take a step back and review the overall performance of the portfolio, taking into account any changes they might make, which would mean the portfolio delivers a more impressive return. .

And a big part of this conversation has to be about consolidation.

Few owners consolidate their portfolios

It is striking how few homeowners consolidate their portfolios with a single lender, as a recent study from Lendlord, a portfolio management platform for property owners and investors, clearly shows.

He found that while about half (46%) of homeowners with up to three properties have consolidated their portfolios with a single lender, that number drops dramatically as the portfolio size increases. For homeowners with between four and 10 properties in their portfolio, a paltry 11% have pooled their financing with one lender.

This figure falls further to 8% of owners with between 11 and 20 investment properties, and 7% of those with more than 20% in their portfolio.

The message here is pretty clear. While it’s quite likely that a small-scale lender will consolidate their portfolio with a single lender, it’s incredibly rare among those with larger real estate portfolios.

Jump through hoops

So why don’t the owners consolidate this loan together? Simply put, too often they are not given a compelling reason to do so.

Yes, many homeowners will recognize how much easier it would be to consolidate their loans to manage these investments. After all, a single mortgage repayment date is easier to remember than 10 different dates. Too often, however, homeowners and their brokers are forced through a myriad of hurdles to do so by lenders who make consolidation far too complicated. It would be one thing if these complications then resulted in the expected financial savings, but there is also a problem here, as some lenders make consolidation prohibitive.

Just as brokers rightly scour the market when the homeowner makes the initial purchase to identify the best possible rates, making sure to pay as little upfront as possible, the same tactic is employed when refinancing, considering each loan. individually rather than as a whole.

Do things differently

It doesn’t have to be like that though.

Consolidating these different individual rental loans into a single portfolio product can not only make portfolio management simpler, but it can also offer real financial benefits, ensuring that homeowners reduce their repayment costs and reap more of the rewards. their investment work.

However, this only happens if the owner is working with the right lender. At Monument, we have adopted the idea of ​​a new approach, centered on a more flexible attitude towards criteria and loans. Our portfolio owner borrowers are individuals with their own business strategies and investments. If we are to develop the mortgage products that they will truly benefit from and that will allow them to get the most out of their portfolio, then we need to understand those strategies and investments, understand them as individual owners. It means a more borrower-focused mindset.

Work with like-minded partners

Ultimately, portfolio owners benefit from working with partners who truly understand their business and can help them get the most out of their investments. It starts with mortgage brokers and tax advisors who can help them organize the most efficient financing for their portfolio, ensuring that the sums always add up and that the returns are maximized.

But it also extends to the lenders they use too. Nothing replaces experience and expertise, and working with lenders who truly understand the needs of this field not only ensures that homeowners have a more efficient process, but also benefit from products designed specifically for investors in their area. situation.

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