Covid-19 Bounce Back loans for property businesses16:06 PM, 5th May 2020
About 3 weeks ago 46
Before I start, please don’t confuse me with the other more knowledgeable and financially astute Neil Patterson on this forum!
I can see the merits of holding property in a limited company given the changes to the tax treatment of mortgage interest. However, I’m hitting a problem in practice. I’ve recently remortgaged a property held in my own name for 2 years fixed at 1.69% with a 65% LTV and £1,800 fee. A great deal, no doubt about that. However, I’ve recently agreed to buy a property in a company (which I set up for the purpose) and approached my IFA to get finance. I’d read the rates were more or less similar, but the best he has come back with is a two year fixed at 3.6% with 68% LTV and fees of £3,445. And that is with a personal guarantee, so I don’t even get the other benefits of limited liability (not that I need them).
It doesn’t take a genius to realise that saving 20% tax on a rate of 3.6% is much worse than paying 1.69% with less tax relief. Let alone the higher fees involved.
Is anyone else experiencing this problem and if so have they found a way to make it work? Or do I just need a new IFA?!
Any insights appreciated.
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