Embarking on the journey of purchasing investment properties through a limited company can be a thrilling yet complex experience. With numerous factors to consider, from mortgage rates to corporate structures, the process can be challenging. This is where a Buy To Let Limited Company Mortgage Advisor becomes essential – your guide through the intricate world of property investment.
The Mortgage Process for Buy To Let Limited Company
Understanding the mortgage process is vital for investors using a limited company. It involves examining your company’s financial situation, understanding specific mortgage rates for companies, and choosing the right mortgage deal for your investment goals. A Buy To Let Limited Company Mortgage Advisor will lead you through each stage, helping you make informed decisions.
The Benefits of Working with a Buy To Let Limited Company Mortgage Advisor
The benefits of consulting with a mortgage advisor for your company are extensive. They offer bespoke advice tailored to corporate structures, assist in comparing various investment mortgage deals, and help in deciphering complex financial and legal terms. Their expertise is crucial in securing a mortgage that aligns with your company’s investment strategy and financial objectives.
What to Expect from a Buy To Let Limited Company Mortgage Advisor
Expect your advisor to be a well-versed guide in the buy to let sector. They should provide a detailed overview of the investment mortgage landscape, help with tools like return on investment and our buy to let mortgage calculators, and explain relevant regulations and tax implications. However, you should always seek independent tax advice from a professional tax advisor. Your advisor can also clarify additional costs associated with property investment through a limited company.
How to Secure a Buy To Let Mortgage for Your Limited Company?
If you’re in search of knowledgeable, trustworthy, and clear-cut mortgage advice for your investment properties, look no further. With extensive experience in the Buy To Let Limited Company market, our team at Kerr & Watson is equipped to guide you through every step of your investment mortgage journey.
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Who Are Kerr & Watson?
Kerr & Watson is an independent, regulated mortgage and insurance broker with comprehensive access to the market. Our rich experience and robust industry connections with mainstream providers, specialist lenders, and insurers place us in an advantageous position to secure the ideal mortgage and insurance policies for your limited company. We are dedicated to providing you with a tailored financial solution that meets the specific needs of your property investment venture.
What is a Limited Company Buy to let Mortgage?
A limited company Buy to let mortgage is a loan secured for the purpose of purchasing rental property, not under an individual’s name but through a limited company. This approach gained traction following changes to stamp duty and BTL mortgage interest tax relief in 2016, which increased the cost of growing a property portfolio. Registering as a limited company allows landlords to maintain tax relief advantages, which might otherwise be lost.
How Does a Limited Company Buy To Let Mortgage Work?
These mortgages are similar to regular BTL mortgages, with the primary difference being the lender’s assessment criteria. High street mortgage providers often view limited companies as riskier, particularly when these entities represent self-employed landlords. This perceived risk can make obtaining a mortgage more challenging, though the growing number of limited companies has also expanded the availability of mortgage options.
Limited Company Eligibility and Criteria
Purchasing a property using a limited company is open to anyone, subject to lenders’ criteria. The property’s potential and rental yield are assessed similarly to personal BTL mortgages, with loan limits usually between 75% and 85%. A key requirement is the company’s setup under specific SIC (Standard Industrial Classification) codes, which restrict the company’s activities to property buying, letting, and management.
Advantages of Limited Company Buy to let
- Tax Efficiency: Profits retained within the business are subject to corporation tax, which is typically lower than personal income tax rates. This can facilitate the reinvestment of profits into property portfolio expansion or improvements.
- Business Expansion: Increased tax efficiency can result in more capital availability, offering opportunities for further investments.
- Control Over Profits: As a company director, you have the discretion to reinvest, save, or distribute profits.
Disadvantages of Limited Company Buy to let
- Complexity: The process can be more involved compared to personal mortgages.
- Limited Mortgage Options: Limited company BTL mortgages are less common, potentially leading to less competitive interest rates.
- Additional Expenses: Running a limited company incurs costs like account preparation, legal fees, and potential audit requirements.
Special Purpose Vehicles (SPVs) in Buy to let
SPVs are limited companies specifically set up for managing Buy to let properties. They offer a tax-efficient way to hold multiple properties but are restricted in their operations to property-related activities only. Setting up a new SPV is straightforward, and while it’s possible for anyone, it’s crucial to ensure that it aligns with your investment strategy.
Choosing Between an SPV and a Trading Limited Company
The decision hinges on your business’s nature. SPVs are ideal for focusing solely on property rental income, whereas trading companies involve other business activities. Most lenders prefer SPVs for BTL mortgages due to the lower perceived risk.
Limited Company Buy to let with Bad Credit
Obtaining a mortgage with a poor credit history is possible but may require approaching specialist lenders. These lenders assess current finances, future projections, and recent credit history more holistically.
Limited Company Buy To Let Mortgage Rates and Lenders
Interest rates for limited company buy to let mortgages vary and are subject to market changes and lender-specific criteria. It’s often necessary to consult mortgage brokers or intermediaries, as many lenders in this niche operate exclusively through them.
Conclusion
A limited company buy to let mortgage offers a viable route for property investment, particularly in the current tax environment. While it comes with its set of challenges and complexities, the potential benefits in tax efficiency and business growth can make it an attractive option for many investors. As with any investment decision, thorough research and professional advice are key to making informed choices that align with your long-term financial goals.
Given the specialised nature of limited company buy to let mortgages, seeking advice is highly recommended. Kerr & Watson can provide insights tailored to your circumstances and help navigate the complex landscape of property investment through a limited company.
Contact Kerr & Watson about your Limited Company Buy To Let Mortgage.
