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B2L Mortgage Draw Down and Consolidation


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Hi All,

Over the past 10 years I've built up a portfolio of B2L properties and - being a "rate tart" - have signed up for a variety of B2L mortgages with a variety of B2L lenders for a variety of, mainly, fixed rates for fixed terms. At the end of the fixed terms I then re-mortgage or sign-up for another fixed term with the same lender.

I've decided that the time has come to stop being a "rate tart" and, instead, consolidate the debt into a single draw down facility with a single lender.

The main reasons for thinking about this is that I am increasingly getting hit with higher setup fees for each mortgage every few years (to either switch to another B2L product with the same lender or re-mortgage to the latest "tart rate").

Another reason is, with capital growth slowing, I don't want to have to keep re-mortgaging each property just to be able to extract a little bit of extra equity (so that I can fund the next deposit).

Has anyone got any experience in consolidating debt into a single facility.

Should I do it ? Should I stay a tart ? What do other people do ? Any recommendations on the sort of % of base rate I can expect to pay and fees etc. A high street bank is quoting 1.25% over base for the term - is that good, bad or ugly ?

Thoughts ?


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Should I do it ? Should I stay a tart ? What do other people do ? Any recommendations on the sort of % of base rate I can expect to pay and fees etc. A high street bank is quoting 1.25% over base for the term - is that good, bad or ugly ?

Thoughts ?


Are the the Robinhood bank per chance as taking the piss with a 1.25% over base as well as arrangement fees.

Will PM you the name of a broker I have been using and she is quite good.

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I'm not at that stage yet but it's something I've been thinking about with the flood of low fixed rates usually short term 1-2 years each with huge lender fees added on. Saw a fixed rate today think it was a mail through an advert on this forum which had a massive 5% lenders fee added on it (and I thought 2.5% was OTT!). In my personal opinion I think it's good idea to consolidate your B2L products into one, though I'm not sure how that works in terms of rental yield, would the overall rental cover be calculated for all your B2L properties and then suitable products/rates be applied.... I would seek the assistance of a good broker as suggested.

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Hi all,

I thought I would get loads of advice / responses to this question - but I haven't !

Am I to assume, then, that all of the other landlords with lots of properties, who contribute to this forum, have got individual B2L mortgages against each of their properties rather than a draw down facility ?

Any more thoughts from anyone ?


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Have all mine on individual BTL's as have been building Portlolio like a lunatic !

Have thought about consolidating, but am still stuck in a lot of deals at present ...some very good ones....but not a great fan of having all one's eggs in one basket !

but would be interested to hear any info anyone has to forward ...

Also due to diverse nature of my portfolio - commercial, retail, storage, hmo, LH & FH flats, residential and combos of each also letting to failed asylum seekers on 3 yr leases (thru council) means a single lender is going to have to be mighty flexible and very competitive ...




An Interest Rate Swap where the fixed rate payer has the right, but not the obligation to terminate the swap at one or more pre-determined times during the life of the swap. A Swap where the fixed rate receiver has the right to terminate is known as a Putable Swap. Both the Callable and Putable Swaps are also known as Cancellable Swaps. The foreign exchange version of the Cancellable Swap is known as a Break Forward or Cancellable Forward.


An Italian company has recently made a corporate acquisition and funded the purchase by raising floating rate debt at ITL LIBOR plus 50bp. Concerned about the possibility of rate rises in Italy, the company is considering entering into an Interest Rate Swap for 7 years in order to convert the floating rate liability into fixed rate at 8.25%. While the Board of Directors have always intended to retain the business for the long term, there is a 30% chance that they would elect to float the business on the local share market after 3 to 5 years. If they enter the traditional Interest Rate Swap they are concerned about the future potential unwind costs should the early sale proceed (this would result in a loss to the company if rates to the then swap maturity are lower than 8.25%). Alternatively, they could enter the Callable Swap at a rate of 8.75% with the right to cancel the swap at no further cost at the end of 3 years or the end of 5 years. The company will pay the higher than market rate (8.75%) and receive ITL LIBOR. At the end of 3 years, if they choose not to cancel the swap, the Swap continues at these rates and they retain the right to cancel at the end of 5 years. Should the choose to cancel the swap after 3 or 5 years, the swap ceases at that point at no cost to the company.

Callable Swaps are also used by investors to Asset Swap Callable Bonds. If the Bond is called by the issuer, the investor can in turn call (i.e. cancel) the Swap. The Callable swap can also be used merely as a mechanism to protect the fixed rate payer from adverse rate movements in the future. In effect it gives the payer a chance to change their mind about paying fixed.


A simple Callable Swap (i.e. the right to cancel once only) is an Interest Rate Swap plus a bought Receiver Swaption. If for example there is the right to cancel a 7 year swap after 3 years, the Callable Swap is a pay fixed 7 year Interest Rate Swap plus a 3 year into 4 year Receiver Swaption where the strike rate on the swaption is equal to the rate quoted on the Callable Swap. The higher than market swap rate for the Callable Swap is to pay for the purchased Receiver Swaption.

Where there is more than option to cancel, the Callable Swap is an Interest Rate Swap plus a series of Contingent Swaptions, i.e. the second right to cancel is contingent upon the first right to cancel not being exercised.

In general, the "cost" of the Callable Swap (the difference between the Callable Swap rate and the market swap rate) is dependent upon four key variables:

(a) Interest rate volatility. Higher volatility will lead to higher costs (see Receiver Swaption Pricing)

(B) Number of rights to cancel. Generally, the more rights, the higher the cost.

© Time to first right to cancel. Generally, the longer the period, the higher the cost.

(d) The shape of the yield curve. The cost of the Receiver Swaption will clearly depend on the relationship between the current swap rate and that rate implied for the period of the swaption (see Implied Forwards). If a curve is positively sloped, steeper curves will lead to lower cost as the strike on the Receiver Swaption will tend to be out-of-the-money. For negatively sloped curves, very negative curves will lead to higher costs as the strike on the Receiver Swaption will tend to be in-the-money.

Like all derivatives, particularly options, the Callable Swap is priced assuming that the counterparty acts in an economically rational way. With simple Callable Swaps (i.e. one right to cancel), if rates have fallen below the original Callable Swap rate, it is in the best interest of the company to cancel the swap and replace it with a plain vanilla swap at the then prevailing market rate.


Callable Swaps are suitable for any fixed rate payer where there is a desire either to protect against adverse rate movements in the future, or where there is a business reason why the swap may need to be cancelled at some point in the future and the company wishes to protect itself against the potential costs of unwind. There is also clearly a demand for Callable Swaps from buyers of Callable bonds if they wish to Asset Swap the bonds.


Right to cancel effectively limits downside

No up front premium

Written as one contract (i.e. not Swap PLUS Swaption)




Higher Swap rate than the traditional swap


Complex Defensive

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Most of the big lenders have products in place ......they need to, to survive! ...

More importantly have you got your res M on offset with Q book as this doesn't half give flexibility (most lenders have these as well but dont advertise them a they dont appear to be to keen on them -wonder why ?!!!).....

Along with a drawer full of 0% credit cards (and a large spread sheet to control use of) ...

Have also considered offshore M ...which do have benefits ....alt currency M's ......

Be great to have some onfo on these ....still waiting for that guy to repost on Green M's, i fancy a Blue one myself, but not a red one, in case the interest does what all red cars do....ie go faster.LOL.

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