Limited Company BTL Mortgages – What to watch out for?

by Readers Question

9:51 AM, 19th April 2017
About 2 years ago

Limited Company BTL Mortgages – What to watch out for?

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Limited Company BTL Mortgages – What to watch out for?

So I have now accepted the inevitable and set up a private limited company.

I had an offer accepted on a property this weekend which I am intending to now buy through the company.

I currently have 14 rental properties which I own personally and have BTL mortgages on all of them through the usual suspects, e.g. Fleet, Birmingham Midshires, Aldemore, The Mortgage Works, etc.

However, before I begin exploring my funding options through the company I thought I’d ask on here if there are any things I should watch out for?

Thanks

Pam



Comments

Neil Patterson

9:59 AM, 19th April 2017
About 2 years ago

Hi Pam,

First off the top of my head is the lenders often want the company to be a Special Purpose Vehicle (SPV) or also called a Single Purpose Vehicle. That means the company is only able to trade for a specific purpose and has only one SIC code registered at Companies House.

They may also want a personal guarantee and many commercial lenders are not high street or even deal directly with customers so using a Broker is usually the best way forward.

Please see our property finance tab >> https://www.property118.com/finance/

Graham Bowcock

10:42 AM, 19th April 2017
About 2 years ago

Dear Pam

One of my limited companies recently completed a re-mortgage and purchase with two loans from Aldermore. I dealt with them directly, after some shopping around, and was pleased with the rate and service. Speed was perhaps not great but I know that all banks now need to have to jump through so many hoops to get an offer agreed.

Besides the two mortgages we had to provide personal guarantees (from all directors) and a debenture. Aldermore were flexible; we have had trouble in the past with a floating charge from another lender who proved to be inflexible when we wanted to borrow off somebody else. However, we explained the situation to Aldermore on day one (we still have loans from the offending lender) and they agreed to sit behind them.

The debentures and guarantees do incur costs and time so be warned it is not an overnight job. Most lenders will want these for a loan to a limited company.

Good luck
Graham

John Constant

10:46 AM, 19th April 2017
About 2 years ago

In addition to that mentioned above by Neil, a majority of lenders will also require a floating charge over the assets of your Ltd Co too. There are one or two lenders who do not have this requirement though.

Pamela Potter

11:18 AM, 19th April 2017
About 2 years ago

Reply to the comment left by "Neil Patterson" at "19/04/2017 - 09:59":

Being a SIC won't be a problem. Thanks.

Pam

Pamela Potter

11:21 AM, 19th April 2017
About 2 years ago

Reply to the comment left by "Graham Bowcock" at "19/04/2017 - 10:42":

Thanks for that Graham. I spoke to my broker yesterday who had a peep at the options and said that Aldermore were, at the moment, the best option for me. Spoke to Aldermore directly and they were great and explained that they will be basing their decision very much on me as a reliable, low risk option. He said that as I already have seven mortgages with them and they're all doing fine he can't see any problems. They've already sent over the forms to apply. Unfortunately, the estate agent tried to drag me into a bidding war yesterday so I walked away from the purchase. Life's too short!

Onwards and upwards.

Pam

Ern Collison

11:55 AM, 19th April 2017
About 2 years ago

I am currently arranging a limited company mortgage through N&P.
Lower rates, lower product fees, lower valuation fees etc than Aldermore.
However, they do require you to pay their legal fees (estimated at £500 plus VAT), and (the most annoying condition for me) there is a requirement to provide annual audited or certified financial statements.

Howard Reuben CeMap CeRER

13:06 PM, 11th May 2017
About A year ago

I would also add that every BTL landlord - irrespective of whether the BTL mortgage debt is borrowed under a personal name or a Ltd Company name - should arrange life cover to cancel out the debt, and pay final expenses and costs, to ensure that the assets are inherited unencumbered and stress-free, and passed to who they want to benefit, without any additional grief or trauma.

Running a BTL 'business' means proper company financial planning, taking in to consideration all aspects of asset and liability management - should be properly considered and implemented.

We offer a free quote service and also free insurance and trusts implementation service.

Contact me via my profile us to discuss your situation, after all there's nothing to lose - whereas procrastination could cost thousands in debt repayments, legal costs and family uncertainty.


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