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  • Mortgages & Finance

    Lending to a new limited company

    Hi, Ive heard that it is easy to get mortgages in a company name. Is this true as my broker has never really been forthcoming with the answers.

    I currently have a couple of business's but I was looking to open a new company specifically for property.

    Any advice would be highly appreciated.

    Many thanks

    Jonathan

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    Yes, it is true and most specialist BTL brokers can guide you through the criteria to set up the 'right' company structure and which lenders you would be eligible for.

    Contact the BTL broker team at https://www.propertytribesfinancialservices.com on 01206 654444 anytime

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    Yes I agree. It's not difficult.and lenders are now starting to not even charge a premium for a company BTL. You should also consider the tax implications/

    Contact me if you want mortgage and/or tax advice.


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    Tax advisor and mortgage broker

    stuart@johnsonsca.com

    02039077022


    Agree with all above, Just make sure you have the right SIC codes when creating your company if it solely used for property purchases and transactions only.

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    • 68100 – Buying and selling of own real estate
    • 68209 – Other letting and operating of own or leased real estate
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    _________________________________________________________________________


    The above post is not financial advice, its often me rambling - passing time on a coffee break.
    If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance.


    _________________________________________________________________________

    jonathan i am not a broker or accountant just a punter.

    there are plenty of Company mortgage providers out there which your broker can source.

    they like an SPV company with the correct SIC codes rather than an existing company.  you also need to be sure its tax efficient for you eg if you want to take income from the company you could be hit by Corp tax and income tax

    Couple of things to be aware of

    1 they are more expensive (interest rates still higher)

    2 they cost more to set up (product fees, company/admin fees) plus a fee for an independent solicitor to confirm you understand that you act as a personal guarantor

    3 watch for other costs such as double solicitor fees.

    ask you broker to check these costs out in advance

    hope this helps a bit

    Adrian



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    Hi JonathanR84,

    You've already had good answers, but I'll add: typically now, it isn't much more expensive to borrow in a Ltd Co name. Whilst it's true that the very lowest rates won't be available to you, many Ltd Co applications we see are for HMOs/freehold blocks etc and the very lowest rates aren't available for those anyway, so borrowing in a Ltd Co makes no difference.

    Definitely set the company up with one of the approved SIC codes (68100 is always a safe bet).

    Regarding solicitors costs, the more specialist BTL lenders are a royal pain over this, but it is getting better. To help our Ltd Co clients keep costs down, we've put together our own network of conveyancers that can act for all the main lenders, including 'dual rep' (acting for borrower and lender). We have managed to get these costs down to a level on a par with individual borrowers, apart from the Ltd Co specific costs (dealing with the PG primarily). This is adding £150 - £200 to the normal conveyancing costs, so it's not too onerous.

    The decision as to whether to use a Ltd Co is not nowadays based on the financing costs/fees, but primarily your own tax position and long-term property strategy.

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    "Ive heard that it is easy to get mortgages in a company name"

    Im not sure on the context of the question, Jonathan.

    If you have heard that it "easier" to get mortgages in a company name than in a personal name. Then this would be incorrect as lenders assess both in a similar manner.

    If you have heard it in the context, that its "as easy" as in personal name. Then this would be more or less accurate, there is a reduced choice compared to personal name. Though we are not talking a huge drop, there is a lot of competition in the Limited Company Buy to Let space.

    There are many LTD Co BTL Mortgage Products and many LTD Co BTL Mortgage Lenders. When you get into the more specialist stuff like HMO's you will notice very little difference in rates compared to personal name. Though they are catching up on Vanilla BTL there is a few points difference.

    "Lending to a new limited company"

    Lenders prefer it when you lend to a "New LTD CO" they are not keen on lending to Trading Companies. That have been doing other activities, as those can bring in risks.

    You will find the term SPV used a lot when discussing this, a special purpose vehicle for owning & renting properties.

    "Is this true as my broker has never really been forthcoming"

    Residential Mortgage Brokers don't often get buy-to-let cases irregularly and when they do LTD Co would co may be quite rare.

    You really want a mortgage adviser that specialises in Buy to Let mortgages, if that is Bespoke Finance, Property Tribes Financial Services or another.

    To them LTD Company would be a regular occurance and be able to discuss the varied options available for you.

    It's getting a bit old now - but there is a FAQ on Bespoke Finance titled What you need to know: Limited Company Buy to Let FAQ. That may get you set in the right direction.

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    _________________________________________________________________________


    The above post is not financial advice, its often me rambling - passing time on a coffee break.
    If you are looking for the Best BTL Mortgage? Call the Specialist Team at Bespoke Finance.


    _________________________________________________________________________