Limited Company Buy to Let

Our limited company buy to let mortgage service

Special features of what we offer include:

• Whole of market service - we can compare buy to let mortgages for limited companies from most UK lenders

• Access to leading BTL market mortgage rates

• Access to exclusive buy to let loan deals not available on high street

• Fast turnaround - speak to us today if you need to move quickly

• To investigate your company, buy to let mortgage options call our BTL mortgage team on 0117 403 4474 or fill in our call back form.

The essence of the Fair Mortgages service is professional independent mortgage and protection advice brought to you by a team of specialist advisers and experienced administration support. 

As your mortgage is such an important transaction, good advice is imperative.

Advantages of Setting up a Limited Company

From 2017, private landlords can no longer deduct their entire finance costs from their property to calculate their profits at the end of the tax year. However, the new tax rules do not affect limited companies. This has led to many private landlords looking to set up limited companies for their buy to let properties, to circumvent the new tax rules.

It is important to note that there are a certain amount of costs that are associated with setting up a new limited company that should be considered. 

Limited Company Buy to Let

Securing buy to let finance as a Limited Company is possible, however lenders tend to have specific lending criteria and requirements which differ from what would be expected from an individual borrower, it may also be more difficult to secure this type of finance for a limited company from high street lenders.

Certain lenders that do offer limited company buy to let finance may stipulate that they will only lend to Ltd companies that deal solely  in property; such as Special Purpose Vehicles (SPVs).

Specific criteria lenders may require in order to grant a buy to let mortgage to a ltd company includes:

• A rental yield of at least 145% of the monthly mortgage payments

• A personal guarantee                                                       

• A loan to value of 65%-85%

• At least two directors ( or one if there is only one) will need to be credit scored

If you already run an existing trading company that is not a special purpose vehicle then you may find it more difficult to find a mortgage although there are a select few lenders who will consider these applications even if the trading company does not run in property.

Getting a buy to let mortgage through a newly set up limited company is possible as well with some lenders, but they may need to verify the income of the directors in order to garner the underlying affordability of the loan.  Even If the directors have an adverse credit history it may still be possible to get the mortgage as long as the lender’s criteria are met. Lenders often require directors or major shareholders to sign a personal guarantee, these work by the individual agreeing that if the lender has to repossess the property and there is still money owed after the property has been sold that individual is accountable for the remaining sum which would be the same if you applied for the buy to let mortgage personally.

Buy to let products suitable for limited companies do also tend to have more expensive interest rates than what would be available for an individual applicant however there are still a wide enough choice of products to make shopping around to try and find the best deal available for a limited company worthwhile. However some of these products may only be available from specialist lenders which can only be accessed via a professional intermediary.

Changes in buy to let

From 2017, further changes to how buy to let mortgages are regulated will be implemented that will make it harder for those looking to secure finance for buy to let properties.

Review of the entire portfolio: The borrower’s entire property portfolio will come under scrutiny when traditional lenders decide whether to provide a mortgage for a buy to let property.

Borrowers will be expected to provide the lender their entire financial records detailing every one of their buy to let properties. This could affect the borrower’s application, in the event that only some of their properties’ rental coverage ratio is over 125%.

A stricter stress test: The new stress test is likely to introduce even stricter criteria, which will require borrowers to have a rental coverage ratio of at least 125% of the buy to let mortgage. Also, lenders will have to review new mortgage applications to make sure the borrower can afford the repayments in the event that interest rates hit 5.5%.

If you want to find out more about getting a buy to let mortgage for a limited company, whether it’s a special purpose vehicle or other type of trading company, you may benefit from seeking the assistance of an independent mortgage advisor, who can use their expert knowledge to search across the whole of the market on your behalf to try and find the most suitable product for your limited company’s needs.

To find out if Fair Mortgages could help you, you can fill in our online contact form or call us directly on: 0117 403 4474