Hello and on this episode of The Mortgage and Protection podcast, Scott is back from Propertyze, this time to explain how building a property portfolio works. It's great to chat with you again Scott, how's it all going? Yeah, very well thank you. This one should be quite interesting. Yes, definitely. I'm looking forward to this one. So let's get straight into the questions then. Let's start here of course. So how much money do I need to start a property portfolio? Can I build a property portfolio with 100k? Yeah, 100,000 is a really solid starting point. It gives you enough flexibility to either buy one property outright in some parts of the UK or better yet leverage that capital across multiple properties using buy-to-lap mortgages and bridging loans. The key is using
that money strategically, not just buying the biggest and the fanciest place you can afford but really thinking about the business plan and where that needs to go. Right, okay, brilliant. So a positive start there and that actually leads us into the next two questions combined. You've touched on it there. Is it realistic to buy a property portfolio with 100k, 100,000 pounds starting capital? How many properties could I potentially buy with 100k using mortgages? It really depends on where in the country you're looking to build a portfolio but it's absolutely realistic to just start with 100,000. So if we're looking to keep things straightforward, buying properties that don't need any work at all and they're
ready to go and you can put somebody in them tomorrow as a tenant, then you're going to be looking at a 25% deposit. Now depending where you are in the country you can buy properties for 60, 70, go out a thousand pounds in parts of Yorkshire and further north. Some parts of Scotland you can buy them for under 50. If you're doing a 25% deposit you can buy multiple houses. I would say you probably going to be looking for most people properties in and around the hundred thousand pounds mark. That's the more common kind of solution. So you could buy three or four houses with that. 25% deposit, cost three or four. Yeah, because they're going to, no, it's going to be a hundred thousand pounds exact. Yeah, it's a very good start.
You can build a real solid base to your portfolio straight away. Right, okay. So that's good news there and some useful points hopefully as well. Let's continue on to this question now. So people would like to know what kind of investment strategy would you recommend based on current lending conditions. Now just to reference here, we are recording this episode in August 2025. It really depends on your goals. Some clients want properties that will appreciate and value quicker. So you're going to be looking at more towards the south southeast where and your growth is higher but yield to lower. You could be looking at yields which is ultimately what I think is the more important point. So you want to be chasing properties that have a better yield, better rental income
to that value. Some people want properties that are nearby to them. It needs to be travelable, needs to be with half an hour or an hour of them because it's easy to manage. Others don't care, it could be anywhere in the country. So it really comes down to what it is that you want as an individual. What sort of tenants do you want? Do you want students? Do you want HMOs? Professionals, families? Makes a really big difference on your solution. So I'm going to try and be a little bit general. The main ones really are standard Bitalettes which you put a professional or a family in them. The other ones are HMOs. HMOs give a greater yield but they come with more risk because you tend to have a higher turnover of tenants. So they tend to be
in and out fairly quickly. They obviously are all individuals, it's not like it's four friends or a family in there. It is four individuals renting different rooms in whatever. It tends to come with more wear and tear on a house so there's more costs associated with it and lenders have different products for HMOs. So that's a route you're looking at. The mortgage costs will be slightly higher. It's also not impossible but fairly difficult to go to a HMO as a first-time landlord. So if you're, I mean this is kind of podcast we're covering off how to build a portfolio with a hundred thousand, it's likely that these will be your first purchases. Buying full HMOs straight off is going to be quite a
steep learning curve. So I would probably recommend going straight in with Bitalettes for the first few. If HMOs is really your bag and we can move into that a little bit later on, the most effective solution though, whether it's HMOs or Bitalettes, is to buy things under market value. So if you buy under market value and you do some some level of refurb, it could be just carpet and paint. It could be a full gut back to the back to the brickwork, wiring, heating, bathrooms, kitchens, full decoration. Depending how much work you do, but by doing that you're going to add more value to the house that it's cost you, it should do. So you've created equity. If we then refinance, you get out more money than you would have done by just buying a standard Bitalette. So you're
able to release some money back out. So the total cost to you will be smaller. Although on paper it'll be 25% of the new value retained compared to what you actually paid and spent for the property, your effective, your personal investment of that property might be something down to like 20 or 15% because you've created equity in that. So it's a much better way of growing a portfolio more rapidly and I think it's the best strategy overall creating value. But it comes down to what it is you want to deal with your portfolio. If you want to be relatively hands-off, I've got some money to spend, go ahead and buy some Bitalettes. If you want to get stuck here and make this your career, doing the refurb stuff might be more interesting to you and more profitable.
Right, okay. Well, thank you for that brilliant breakdown there. Lots to take away, lots to consider as well actually. So there we go. Let's continue on to this question now. So just to confirm here, what is the minimum deposit required for a Bitalette mortgage? Right, now again we're recording this in August 2025. 25% is the standard. There are some lenders that do an 80% mortgage, 20% deposit, but they're fairly expensive. They're not very common. It's not worth it in most cases and they're absolutely strapped for cash and it's the only solution and you have to get this transaction done now. They're not products that I recommend lightly just because the cost is so much greater. Okay, so that's something to bear in mind there then when
it comes to the deposit and Bitalettes. Let's look at this question. So can I use 100k or 100,000 pounds as deposits for multiple properties with leverage? Yeah, so this is kind of a similar answer to the one we had earlier on. If you put down a 25% per property, your 100k, we assume 100,000 pound properties to be acquired. You could buy four properties. So your 100k deposit could buy you 400k worth of property. That's not counting legals, valuations, stamptages. So there's obviously you could be mindful of those points as well. But you could be up close to 400,000 pounds worth of property by the sum we get to acquiring those. But that could be divided across two. You could do 200,000 with 50k deposit on
each. You could do 400k, you could do 850k if you're buying them right up north. Do one at 300k and 100k, you can mix and match. It doesn't have to be the same. But yeah, three or four properties are probably what I'd recommend you spend. I wouldn't say dividing it down and buying really cheap properties up north and buying.
Yes, a good top tip there. Right, okay, let's continue on. We're getting through these questions now. So we've got two combined here. Are there specific lenders who are better for portfolio building? And are there mortgage products specifically designed for property investors or portfolio landlords? Yeah, some lenders are better at the portfolio side of things. And there are products designed for bigger lenders. So the ruling by the PRA and the SDA is that if you have four or more properties, you are a professional landlord. And that changes which lenders you can use. So some lenders want you to be a professional landlord, they want four or more, because they can then classify you as experienced. And the products change and how they create their
products changes in the background doesn't really mean a lot for the clients. If you've only got one or two, you're not a professional landlord. But it does mean you could use some high street lenders, because some high street lenders will have the lend you on one, two or three. As soon as you get four, you're a professional, they have no interest, it's changed the length of choice. So there are some designed, some lenders better for portfolio landlords. There are lenders out there who do portfolio mortgage, which is a mortgage across multiple properties at different locations that have to be on the same title. As an example, I did one, which I just posted about today, in fact, but it completed last week, and we did 144 separate
properties into one loan facility for a client. So they now have one mortgage payment, one loan to renew in five years time, but all 144 properties. So we've simplified that client's mortgage headache. Those sorts of lending, there are fewer lenders that do that sort of thing, but it's available. So if you've got a port failure of 10 or 15 properties, we can simplify that mortgage process by consolidating those. So yeah, there's different lenders for different things, depends where you are with the port failure, and ultimately, where your goal is. This particular client is working very closely with that bank, because they're growing their portfolio very aggressively. So that the bank is very happy
to work with them through different facilities, different structures, and creating kind of bespoke solutions for them. If you've only got a few, we can still find lenders that will work with you and fit your business model better. Okay, well, that was a great example again there. So it just paints a picture here, doesn't it? Now, let's look at this question. So again, you might have touched on this actually, but are there products that offer flexibility in case I want to sell or switch strategies? Some lenders offer products with no ERCs, barely for payment charges. Some have smaller fees, reduced ERCs. The other thing you can look at is a shorter fixed time. So taking a two-year product over a five-year product, that changes
affordability for the product. You tend to be able to borrow more money on a five-year product than you can a two because of the way that rental calculations work. But if your loan still fits, and you think you might need to restructure until your time, take the shorter term.
If there's a lot of flexibility needed, it might be that bridging loans are the better solution for you because they have no ERCs at all. And you can pay them back relatively quickly, and the finance can be in place quickly. So if you're looking to potentially buy refurb and sell properties, clearly a two or five-year fixed product is not going to be suitable for you. Bridging loans are much better for that sort of thing. So it depends on the scenario. Right. Okay. So there we go. Something to bear in mind there. And following on, do lenders have limits on how many properties I can buy or finance? Yes and no. Some lenders, like the high street ones I've mentioned before, cap at three, because after that you become a professional. The majority lenders have no real cap. They might have
a cap on the number that they'll take. So for example, some of the lenders have, they won't take more than 10 properties from you. Even if your portfolio is 20, 30, 40, 50, they will only take 10. And the rest you've got to find somewhere else. If you go down to the, that's a bit further down the line to lenders that do the portfolio lending, there's no limit. There's many as you like. Right. So it really depends where you are on the scale with your portfolio. Okay. Well, there we go. But that's good. That's good news there. We've got four questions left for this episode. Let's move on to this one. So how does my income and credit score affect what I can borrow for a buy-to-let? Income is less important than
credit score in the majority of cases. Credit score is pivotal. If you've got clean credit, a good credit score, we have access to all the lenders that we could want to use. If there are blips on your credit, it does start to reduce who we can use. I mean, the bigger ones, the bespoke lenders with the big portfolio lending, they're a lot more flexible. They'll take a bit more of a view on things, but it needs to be reasonable. Income is much less of a point from a personal understanding point. So some lenders have, there's only a few of them now, they have like a fixed £20,000 income requirement, which has to come from sources other than properties. If you already have buy-to-lets and you have income, you can't use that towards your
income requirement for some lenders. So you have to have a full-time job somewhere else, or a part-time job, you know. Majority lenders, especially if you're buying properties into a limited company, which is more commonly the root these days, the income requirement is zero. Oh, right. Okay. So that explains that there. And that leads us on to this next question. Do I need a job or a minimum income to qualify for multiple buy-to-let mortgages? So, no. Most lenders, if you're building a portfolio, don't have an income requirement for you as an individual. However, it needs to be reasonable and plausible. You have absolutely no income, and you're buying a buy-to-let that's going to make you £300 a month of profit,
£400 a month of profit after mortgage costs. That doesn't create a liberal wage. So the bank will then come back and say, well, we don't have an income requirement, but £300 a month isn't going to, you don't have to survive on that. So what is the stress? How does it work? So someone can explain the point. So it might be that you've got savings. If you've got £100,000 on property as per this kind of podcast, it might be that you've also got the pot of cash somewhere that you're living on. And that explains it. Box ticked, we can move on. So while there's no necessarily no income requirement, it needs to be plausible. We might need to explain it to a lender somewhere. Right. Okay. There we go. So a point to bear in mind. Can rental income be
used to support further borrowing here? Yes. So for the majority of people, when you start, you're doing one mortgage on one property. So each property is assessed on its own merits, i.e. property one, its rental income supports the loan for property one, and that's a separate box. And then property two is the same, property three is the same, et cetera. When your property grows and you start looking at portfolio lending, we're able to aggregate a bit more. So when the bank then take three or four or as many properties as you'd like into a single facility, is the combined value and the combined rental income that's used to assess. So for example, you might have portfolio of five properties and four of them have tenants paying market rent. And one of them has
really long standing tenant. They've been in there for 10 years. You haven't really increased their rental because they're no hassle. So on paper that has a low yield compared to the value of that property. If you try to mortgage that by itself, you get a very small loan. But if you bang it in to the same loan as the four other ones and aggregate the rental income across the across all that, you can now essentially pull the profit, the extra bits you need from the four other ones to offset the shortfall in the lower one. So doing that allows you to borrow more money across the portfolio, which is great if you've got a couple of HMOs in there and then some buy-to-lets, maybe they have slightly lower yields, you can use all that
as borrowing more money. So rental income can be used. Some lenders allow you to use top slicing, which is something I haven't mentioned yet. So if for example, you're trying to buy a buy-to-let and the rental income doesn't quite cover the loan you need, but you have surplus personal income, so you're full-time employed, you're only 50 grand a year and there's more, you've got more disposable income than you actually need in your personal name. You can use that to top up the affordability of the loan, which is what top slicing is. Not all lenders do it, but it is available for select cases. Okay, so hopefully that's useful to know there and some jargon as well that you've broken down for us. That leads us on to the last question here. So should I use interest only or repayment
mortgages for portfolio growth? I have never sold a repayment buy-to-let mortgage in the last 10 years now.
I've never seen one sold either, but they are available. There are only a few that do it, the majority are interest only, because as we kind of mentioned before, it's the rental income which determines affordability. The lenders have a rental stress calculator, the properties rental income of £1000 for example goes into the calculator and it tells you that you can borrow £200,000 off the back of that as a maximum mortgage for example.
That's it. Now if you, because the mortgage payment is interest only at £750 a month, a £1000 mortgage payment, sorry, a £1000 rental income is more than enough to cover a £750 of interest, but if you switch that to a repayment mortgage and start paying back the balance, that mortgage payment goes from £750 to a £1200, $1300, the £1000 rental income you've got doesn't work. So the loan has to get considerably smaller to be able to afford a repayment part of that. So most of the buy-to-let lenders don't offer it because it just doesn't suit the business model because they have to lend less money, it's a bit more hassle. The interest only is pretty much the preferred method for everybody, but there are other benefits
that too that obviously improves your cash flow because you're making less payments on mortgages. The debt stays fixed, so if you borrow £100,000 today, yeah it's £100,000 in 10 years still, you haven't paid it down at all. But your property will have increased in value and the effect of inflation will have eroded some of that debt value too. So you know if you think of your parents' homes or grandparents' homes when they first got mortgages out and they took a £10,000 mortgage out, if they had it in interest only and just waited 30 years out, a £10,000 mortgage nowadays you would laugh at how small that would seem if they just waited for inflation to erode the value of that time. So interest only has the benefit of
improving your cash flow and the debt becomes worth less over time anyway. The physical, the actual number of £100,000 doesn't change, but the value of that debt changes. The capital appreciation of the house, your improved cash flow and eventually that debt decreases in its value. And the other thing is well a lot of people build these portfolios for their own income, but their long-term strategy is inheritability to pass it on to children or grandchildren. So the use of life insurance, take out a life insurance policy for the value of the debt, £100,000 for example in that case, you pay the monthly cost of that life insurance. Now when you pass away, the life insurance pays out, it clears the debt and then
whoever's inheriting that property from you, inherits it without debt at all. So it's a much more effective way of creating wealth, generational wealth and inheritability.
Yes, well there we go again Scott, it's really thorough there so thank you ever so much, hopefully that explains it all. Have you got anything else you'd like to add at all? I mean there's a lot there isn't there to take away? It's a lot there, it's one of our longer ones I think, but there's so much in this topic to cover. I mean ultimately a broker ourselves will sit down with you and you know if you came to us and said I've got £100,000 I want to spend, what should I do with it? We pretty much run through this kind of podcast with you, covering off what your appetite to risk is, where you want to invest, how you want to invest, what your goals are for five years, 10 years, 20 years, is inheritability, a concern,
if you don't have kids and you've got plans to pass it onto anybody your strategy might be slightly different, you know, you plan to sell them at 65 to retire rather than keep them and pass them on. All those points really changes how we structure our advice and we've seen it done hundreds of different ways, it's in hundreds of different portfolios all grown different ways for different reasons and some of them work, some of them I think could have done that better. So we've got a lot of experience, we've seen a lot of scenarios that you wouldn't get to see as an individual, people don't share their failures, I get to see it a lot of it so I get to see what, doesn't doesn't work. Yeah. So brokers add so much more value than perhaps just giving you the
mortgage advice. Yes it sounds like you see both sides don't you, all angles and everything so, yeah Scott, thank you ever so much for that. Hopefully that has proved useful to anyone listening to this and I'm sure we'll speak to you again on the podcast very soon. Perfect, thank you very much. Please note, your property may be repossessed if you do not keep up with your mortgage repayments. The Financial Conduct Authority does not regulate most buy-to-let mortgages. For specialist tax advice, please refer to an accountant or tax specialist.
