02 · Buy-to-let
Limited-company buy-to-let
Term mortgages for rental property held in a limited company or SPV. Purchases, remortgages, portfolios and the specialist stuff: HMOs, multi-unit blocks, holiday lets, first-time landlords buying through a company.
Why a limited company
Since the restriction of mortgage interest relief for individual landlords, most new buy-to-let purchases are made through a limited company, where the interest is a deductible business expense and profits are taxed at corporation tax rates. Whether it suits you depends on your income, how long you will hold the property and what you plan to do with the profits; an accountant should confirm that before you buy. Once the company is the right vehicle, the mortgage side is our job.
What we arrange
- SPV purchases through a new or existing company with property SIC codes (68100, 68209, 68320)
- Trading company purchases where the company does something else as well, which fewer lenders accept
- Remortgages at the end of a fixed rate, or to release equity for the next purchase
- Portfolio finance for four or more mortgaged properties, including portfolio landlords moving properties into a company
- HMOs and multi-unit freehold blocks, licensed or not, valued on a bricks-and-mortar or investment basis as the lender allows
- Holiday lets and serviced accommodation in a company name
- First-time landlords and first-time buyers buying through a company, with the lenders who allow it
- Adverse credit where the story is explainable
Typical criteria
| Loan to value | Up to 75%; 80% with a small number of lenders at higher rates |
|---|---|
| Rental cover | Usually 125% of the mortgage payment at a stress rate for a company borrower (145% for higher-rate taxpayers borrowing personally, which is one reason companies borrow more) |
| Rates | Company buy-to-let rates run a little above personal buy-to-let. Product fees of 2% to 5% are common on the cheapest headline rates; we run the fee-versus-rate sum for your loan size and holding period |
| Term | Up to 25 or 30 years, interest-only or repayment |
| Directors | Personal guarantees from directors and usually from shareholders over 20% to 25%; independent legal advice on the guarantee is normally required |
| Deposit | From the company's own funds, a director's loan, or gifted; lenders want to see the trail |
| Minimum income | Most lenders have none for experienced landlords; some require £25,000 or more for first-timers |
How long it takes
Six to ten weeks from application to completion is typical, driven mostly by valuation and legal timescales. Where a purchase has to complete faster than that, a bridge with the term mortgage arranged behind it is the usual answer, and we do both.
What we need
- The property, price or value, and the rent it achieves or will achieve
- Company details (or that you intend to set one up; we can tell you what the lender needs it to look like)
- Your existing portfolio, if any: addresses, values, mortgages, rents
- Deposit source and a rough picture of your personal income and credit history