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LTD company mortgages


Peabod

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Hi,

 

Just in the process of researching BTL mortgages for a LTD company setup.

 

I understand through listening to the Property podcast that Metro bank offer these type of mortgages. Does anyone know of any good mortgage lenders for LTD companies.

 

Thanks,

 

Scott

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Hi Rich,

 

Thanks for your reply,

 

I currently bank with Barclays, however they don't offer commercial mortgages for BTL. After phoning around it would seem only two highstreet banks provide commercial mortgages for BTL, these are Metro and Lloyds. With other specialist providers that seem to offer mortgages at higher interest rates such as Shawbrooke, Aldermore, Norwich and Peterborough and a few others. 

 

I would be interested if anyone has experience with Merto or Lloyds and if they are quick to put together finance?

 

Thanks,

 

Scott 

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I'm planning on using a Ltd company and getting a BTL mortgage of up to 75%, so very interested in this conversation.

I've been told by a mortgage advisor that Paragon will do 75%, but there aren't many others.

 

I have the company ready and bank account set-up with HSBC. Should I talk to HSBC and ask if they have a commercial real estate team?

 

Thanks,

 

Steve

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I'm also interested in this conversation. I am in a similar situation as Steve G, in fact I have a Ltd company setup recently and also banking with HSBC. Looking to flip to start with so assessing bridging loans at the moment, but will be looking for a BTL mortgage of 70-75% LTV in the next few months.

 

Other thing to consider is what guarantees the mortgage lending is looking for. Do they want a personal guarantee from one of the directors? Do they check how much assets you have in the company?

 

I have also heard about Metro but I believe Paragon are quite expensive and some people have been let down by the speed of funds being released. Any mortgage brokers out there who could step in?

 

Cheers,

Jon.

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The Bristol meetup takes place on the first Thursday of every month, find out more here

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Thanks for the replies,

 

Richard M- I am based in Herts.

After some more inquiring: 

 

Lloyds seem very good although to a first time investor they will only lend 60%% LTV.

 

Metro also seem good and will lend up to 75% to a new investor, there setup fees are quite high at £1999 + you have to pay for their solicitor at about £1000.

 

I haven't checked HSBC so would be interested to find out what they can offer??

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Interesting thread!  I have a portfolio in my own name however want to buy through a limited company going forward.

 

Has anybody gone through with any of these lenders and would recommend them?  There seems to be plenty of choice, however I'm interested in other opinions on LTV's, fees etc.

 

Thanks,

Wes.

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I have an offer accepted so am in need of a (relatively) quick decision. Having spoken to lenders today, I seem to be able to get a BTL mortgage through a company for 4.4%, but a comparable personal BTL achieves 2.6% (both 2 yr fixed with 25% deposit).

 

This is my first investment, and although I have the company set up, bank account ready and was fully intending on using it for BTL...I now find myself looking at a mortgage cost through the company of £600 versus half that if I do it in my name...

...so right now my feeling is buy with a personal BTL for now, and hopefully in the not too distant future I might be able to find some more attractive BTL company products and perhaps shift it into the company (or just buy the next purchase through the company).

 

What do people think? Am i being defeatist? Any possible tax saving just doesn't seem to outweigh the extra monthly expense (at least at this time).

 

Any comments welcome to help confirm I'm thinking straight or have it completely wrong and have missed something!!

 

Steve

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Not necessarily.  I think it all depends on your income tax bracket and your future intentions for the property.

 

If the rules on offsetting the interest on the loan do change as per the budget and you're a 40% tax payer, you will be worse off with a personal BTL mortgage in the long run.  Under a company structure you can still offset all of the interest on the loan in the traditional way and take the benefit of only paying 18% corporation tax.  You also get the benefit of withdrawing dividends more tax efficiently.  Crudely, if you're a 40% tax payer a limited company is probably better in the long run; 20% tax payer probably best owning privately.

 

The other consideration is your future intentions of the property. If you want to enable any dependents to inherit the property/portfolio without inheritance tax you can add them into the limited company later on. Otherwise they'll pay inheritance tax.

 

There really are so many pros and cons for each way of doing it.

 

Wes.

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An additional consideration to make with Ltd company mortgages are personal guarentees. Just be aware that the security of the charged asset isn't sufficient especially if there is no lending history.

I know a couple of people where personal guarentees have had a huge impact...

Make sure your affairs are in order if you are taking on a large loan.

 

Barclays will provide some good rates, although their LTV is quite low. I've just agreed two facilities at just over 4.5% fixed for 5 years.

 

Handels Banken were in the market to increase their property lending.

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Steve G, just had the same quote for a limited company BTL mortgage, 4.4% fixed for 2 years @ 75% LTV (they used 5.3% and 1.25 multiplier stress check to ensure rent will cover mortgage) . However, the lenders will only give money to a SPV limited company - I was quoted four different SIC codes that they look for. As we setup the company for flipping and BTL, and future possibility of sourcing etc, we didn't go down the SPV route which I thought was very limited. However, the accountant seems to think that we can create a SIC code for an SPV within our existing Ltd company. Anyone else done this?

 

Cheers,

Jon.

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The Bristol meetup takes place on the first Thursday of every month, find out more here

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Hi Wes, speaking to my accountant, it was him who selected the SIC code based on what I told him of what we wanted to do. I can't find anywhere in my paperwork what that code is though. Going to ask him again.

He seems to think that a ltd company can have any number of SIC codes but I would like to know why lenders request SPV codes in order to finance projects. There does not seem any point if it is just an administrative exercise. Going to try and find out today but if anyone knows, please enlighten me :)

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The Bristol meetup takes place on the first Thursday of every month, find out more here

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Hello Mate,

 

Getting a good company mortgage is not as difficult as most people think. I am one of the directors at Pomegranate Finance and we specialise in this area, especially for the property sector. If you want to send me an email with more details i would be happy to help you out.

 

Thanks

 

Alessio

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Hi Patrick,

 

I have (sort of!).  I say sort of as it's not been checked to see whether it is right and also has all of my own numbers in.  The conclusion I reached however:

 

Now - it is more tax efficient and therefore more profitable to own property in my own name, taking advantage of the 40% mortgage interest relief and the lower personal mortgage interest rates.

 

From 2017/2020 - a limited company is far better!  

 

I have already set up my limited company and will be buying my next properties through the limited company.  It's going to cost me more in the short term but will save me a lot of money from 2020.

 

Probably not quite the 'calculator' you were after; hopefully somebody else has something they are more confident is right  ;)

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Hi Wes, in your cash flow assessment are you taking account of the higher Int rates with LTD? These seem significantly higher to me to the point where it would negate the advantage of lower tax owed. I think he consensus is though that over time more lenders should come to the market reducing the rates through competition.

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Yes I am; the limited company mortgage is 4.49% versus a personal buy to let mortgage of around 3.5%.

The limited company mortgages will cost more in the short term however post 2020 they seem to be more favourable.

If you think ahead to 2020, corporation tax is down to 18%, yet mortgage tax relief changes and therefore you're paying 40% tax (if you're a higher rate tax payer) on the full rent and only getting relief on 20% of the mortgage interest. In the calcs I ran the numbers were vastly different in favour of a limited company.

If you're a basic rate tax payer it's a different situation and the personal buy to let mortgages are possibly going to be better.

Would love to hear from anybody who thinks otherwise though.

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