With this type of buy to let mortgage, you are able to purchase or refinance a property to rent out through a limited company. If you are considering refinancing or investing through a limited company, Mortgaze has excellent access to an extensive range of limited company buy to let mortgage products.
A new rule that will be phased in from April 2017 has deemed that the tax relief that landlords of residential properties may get for finance costs will be restricted to the basic rate of Income Tax.
Since the autumn statement of 2015, it has been a very popular discussion among the landlord community as to whether or not you should secure a buy to let property in a limited company or continue purchasing as a sole trader.
If you are considering investing in a buy to let property through a Limited Company, the Mortgaze team have access to wide range of limited company mortgages.
With direct lines to mainstream lenders as well as many specialist lenders, we are ideally placed to work for you to source the best Limited Company Buy-to-let Mortgage for your individual circumstances.
The majority of the lenders we deal with offer mortgages through limited company and a handful to trading limited companies. (See the FAQ below to understand the difference be-tween Special Purpose Vehicle (SPV) property company and trading limited company).
We can also arrange lending for clients looking to purchase or remortgage through a Limited Li-ability Partnership (LLP) for buy to let properties. Aside from standard residential buy to let properties, we also have access to limited company mortgage products for HMO properties and student lets.
The scenarios highlighted above are those that we most regularly receive requests in assistance with. It is simply for you to get a better understanding of the areas we commonly deal with. Contact us to for a more personalised search of the market based on your individual circumstances.
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We are happy to answer your queries on the phone or in person but here are answers to some of the most frequently asked questions we receive regarding buy to let mortgages for limited companies.
Similar to traditional mortgages secured for a private individual, a limited company buy to let mortgage is different in that it is secured under a company which is eventually owned by you and your co-investors. Your co-investors can be your family members or business partner(s). The majority of the lenders will accept up to four shareholders/directors. A property investment company is a special purpose vehicle which is an alternative to borrowing in your own name.
An SPV, as the name suggest has been set up for a special purpose. the mortgage world, it has been set up to hold a property or a portfolio of properties. A trading limited company on the other hand is alsovolved other business. For example, if you are a self-employed IT contractor, most likely you will already have operated a limited company order to run your business.stead of setting up another limited company, you might consider buying a buy to let property the same company.
Most buy to let lenders which lend to limited companies will lend only to SPVs although there are a handful which will lend to trading companies.
Yes, the majority of the lenders will ask borrowers to provide a personal guarantee. This does not mean that lender will take charge on your home, but case of default the borrower will be personally liable to repay the mortgage. This would be the same case as if you had borrowed personally. Typically the guaranteed amount will be the loan amount minus youritial deposit or equity the property but some lenders might ask for the full loan amount.
While there are certainly more lenders and products available the market if you are bor-rowing your own name, it is not any more difficult to secure a buy to let mortgage a limited company name. At Mortgaze we have access to wide range of lenders who specialise lending to limited companies.
Almost the same as if you were borrowing your own name. There are fixed rate products from 2 to 5 years as well as discount and tracker products.
Yes, we have seen a difference of up to 1.5%, and arrangement fees are linked to the total loan amount, as opposed to the fixed arrangement fee seen most cases of borrowing your own name.
In most cases, the maximum amount you can borrow depends upon the rentalcome from the property. Lenders will perform a stress test based on the rentalcome which will decide the maximum amount you can borrow. The stress test varies among lenders but the majority of them will expect a minimum cover of 125% of monthly payments, which is calculated using a higher rate ofterest than you pay on your actual mortgage.
You can use our buy to let mortgage repayment calculator to work out how much you can borrow. Please note that apart from rentalcome, the majority of the lenders would expect the applicant to meet their minimum personalcome criteria. You can borrow up to 85% but if you put down a bigger deposit, there are of course more options available and you could potentially you secure better terms on your mortgage.
Theitial deposit can be gifted or loaned to the company from your personal savings. You should seek further guidance on this matter from a charted accountant or tax specialist asdividual circumstances vary for each applicant.
The United Kingdom Standarddustrial Classification of Economic Activities (SIC) is used to classify business establishments and other standard units by the type of economic activity which they are engaged. Please ensure that you select a SIC code which is relevant to the purpose of the company.
The Company’s sole activity should be the purchase and/or remortgage of property for let-ting. This must be confirmed by the SIC code registered at Companies House.
The majority of lenders will take a fixed charge, while some lenders will also take a floating charge as well on the SPV company. There are two types of charges, floating and fixed. A floating charge takes security over assets and material that may fluctuate over time, such as stock, but can also relate to property. When a Company uses floating charges it does not affect their ability to use the stock or assets under the charge as normal. Only if the company fails to repay the loan and/or goesto liquidation, does the floating charge become “crystal-lised” or frozento a fixed charge. At that point the lender becomes the first-in-line creditor to be able to draw against the underlying asset and/or its value to recoup its loss on the loan.
To find out how much your buy to let mortgage and bridging loan will cost, use our latest best buy table. You can also use our buy to let calculator to find out how much you can borrow based on the rental income from a buy to let property. Contact us to for a more personalised search of the market based on your individual circumstances.
From how much you can borrow to how much it will cost ? Try our calculators to help you answer those initial queries.
Please note that this calculator is only for illustrative purposes only and is not a mortgage offer. This is a guide to how much you'd pay each month. The exact amount will depend on the type of mortgage and the lender.
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