Term loans: one facility across the portfolio instead of a stack of mortgages

What a term loan is in property lending

A term loan is secured debt with a fixed contractual life, in property lending typically 2 to 25 years, advanced against one property or cross-charged across a portfolio. Every buy-to-let mortgage is technically a term loan, but in practice the phrase means something more specific: a structured facility from a specialist lender, challenger bank, building society or private bank, underwritten on the cashflow of a book rather than the rent of one property, with negotiated covenants and a relationship manager instead of a call centre.

The shorter end, 2 to 5 years, suits landlords repositioning a book: consolidate, stabilise, then refinance to cheaper long-term money once the portfolio is performing. The longer end, 10 to 25 years, suits established books being held for income, often with partial amortisation so the debt shrinks across the term.

We arrange these as non-regulated commercial facilities for portfolio landlords, property companies and family investment vehicles, from roughly £500,000 to £25m+.

Cross-charged facilities versus property-by-property mortgages

A cross-charged facility takes one legal charge structure over multiple titles and lends against the aggregate. The lender looks at total value, total rent and total debt, which means a weak property can shelter inside a strong book instead of failing its own stress test. One valuation exercise, one set of legals, one product end date, one covenant package.

The trade-offs are real. Rates are higher: 5.5% to 7.5% as of June 2026 against 4.5% to 5.75% on the best individual buy-to-let fixes. Selling one property requires a partial release at a pre-agreed release price, typically 110 to 125 percent of that property's allocated debt. And the whole book sits with one lender, so the relationship matters more.

Property-by-property keeps each asset independently financed and saleable, usually at a lower blended rate, at the cost of multiple renewals, multiple valuations and an administration load that grows linearly with the book. Most of our clients are best served property-by-property below roughly £2m of debt and increasingly by a facility above it, but the crossover is case-specific and we model both. The property-by-property route is covered in full on our portfolio landlord mortgages page.

Repayment structures: interest-only, part-amortising, repayment

Interest-only maximises cashflow and is the default for growth-phase landlords: the facility balance stays level and the exit is refinance or sale. Lenders price it highest within the range and watch LTV covenants more closely, because nothing deleverages the loan.

Part-amortising repays a slice of capital, commonly 1 to 2 percent of the facility a year or amortisation calculated on a 25 to 30 year profile with a bullet at maturity. It is the standard compromise on 10-year-plus facilities: the lender gets a deleveraging trend, the borrower keeps most of the cashflow, and covenant headroom builds every year.

Full repayment clears the debt across the term. It suits landlords running a book towards unencumbered retirement income, and some lenders shade the rate down for it because their risk falls every quarter. The right structure is a cashflow decision: we model net cash after debt service under each profile, stressed at rates 2 percent above today's, before recommending one.

Lender consolidation: when a book is spread across too many lenders

Portfolios accumulate lenders the way they accumulate properties: whoever was cheapest at the time of each purchase. Ten years on, a 15-property book can sit across seven or eight lenders, with product end dates scattered through every year, seven sets of annual statements, and several lenders whose concentration limits are already full, which quietly blocks the next purchase.

Consolidating into one facility, or two facilities with complementary appetites, fixes the structure: a single renewal negotiation, a single point of contact, restored borrowing headroom and a clean platform for the next phase of growth. The consolidation itself also surfaces equity, because one whole-book revaluation at today's values usually finds more headroom than the patchwork of historic valuations it replaces.

Covenants: LTV, ICR and cure rights

Term facilities carry ongoing covenants where buy-to-let mortgages test once at application. The two standard financial covenants: a maximum LTV, commonly 65 to 75 percent, retested whenever the lender revalues (typically every 1 to 3 years), and a minimum interest cover ratio, commonly 125 to 150 percent, tested quarterly or annually on actual passing rent against actual debt service.

The detail that matters most is the cure mechanics. A well-drafted facility lets you cure a breach by prepaying debt or depositing cash into a blocked account, with a defined number of cures permitted over the life of the loan. A badly drafted one hands the lender default rights, and default pricing, on a single soft valuation. We negotiate covenant levels, testing frequency, cure rights and the revaluation regime before terms are accepted, because no borrower has leverage afterwards.

Sensible covenant headroom at drawdown is 10 to 15 points of LTV and 25-plus points of ICR. Check where your book sits on our portfolio LTV and ICR calculator, and see our stress test and ICR guide for how facility covenants differ from application stress tests.

When a term loan beats individual BTL mortgages, and when it does not

The honest comparison, based on the cases that cross our desk.

For commercial and semi-commercial heavy books the comparison shifts again, towards the structures on our commercial mortgages page.

Indicative pricing, June 2026

Portfolio and term facilities price at 5.5% to 7.5% as of June 2026, fixed or floating over Bank of England base rate. Within the range: larger facilities at conservative LTV with amortisation and clean books price towards 5.5 to 6.25 percent; smaller facilities, higher leverage, interest-only structures and mixed-asset books price towards 6.5 to 7.5 percent. Arrangement fees run 1% to 2% of the facility, and lenders typically expect the borrower to cover valuation and both sides' legal costs.

Private banks can undercut the range for the right client, usually where assets under management accompany the lending. Building societies appear at the smaller, simpler end. Specialist and challenger lenders write the bulk of the mid-market.

Worked example: consolidating 8 mortgages into one facility

A two-director SPV holds 8 properties, six single-lets and two small HMOs, valued at £2.85m in aggregate, producing £196,000 a year in rent. Debt of £1.78m (62 percent LTV) sits across six lenders at a blended 5.9 percent, with five products maturing inside 18 months, two lenders at their exposure limits, and the HMO lender unwilling to advance further. The directors want to add two HMOs a year for the next three years.

We placed a £2.0m cross-charged term facility with a challenger bank: 10-year term at 6.1 percent fixed for five years, part-amortising at 1.5 percent of the facility a year, 1.25 percent arrangement fee (£25,000), with a pre-agreed £350,000 acquisition tranche drawable against new purchases at 70 percent of value. Covenants: maximum 70 percent LTV retested at three-yearly revaluations, minimum 135 percent ICR tested annually, two cash cures permitted over the term. Release pricing for any sale was negotiated to 115 percent of allocated debt.

Day-one position: £1.78m of old debt redeemed, £195,000 of equity released after fees and costs towards the first acquisitions, and covenant headroom of 8 LTV points and 39 ICR points (actual ICR at drawdown: £196,000 rent against £112,850 of debt service, 174 percent against the amortising profile). One renewal date in place of six, and the next two purchases funded from the tranche without a single new application. Time from instruction to drawdown: 11 weeks, most of it the eight-property valuation and legal due diligence.

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