Limited Company Buy-to-Let Mortgages
Become tax efficient with your property
- 85% Loan to Value (LTV) mortgages available
- 100% Loan to Value (LTV) available with additional security
- No minimum income required
- No maximum age requirements
- Personal or Limited Company finance available
- Interest only mortgages available
- Ex-Pat & Foreign national mortgages available
- Second charge finance available
Limited Company Buy-to-Let Explained
Limited Company Finance has become one of the fastest growing areas of buy-to-let finance. The Main Benefits of using a Limited Company include preferential tax implications such as being able to claim back the Mortgage as a Tax Deductable expense (Tax Advice is Recommended).
SPV lending refers to lending to a Special Purpose Vehicle (SPV) or limited liability partnership (LLP) which is a company which is set up normally with in as little as 24 hours with no previous trading history being required. This SPV Company then acts as a Property Holding Company which is then used for the sole intention of buying, selling and renting out properties.
In property investment, an SPV might be used to own and manage a single buy-to-let property, a portfolio of properties, or a development project.
Why Use an SPV Company?:
- Risk Mitigation: By using an SPV, the risks related to owning or developing property are isolated from the personal finances of the investor or the parent company.
- Tax Efficiency: In certain cases, using an SPV can offer tax advantages, such as better structuring for capital gains tax and the ability to offset expenses more effectively.
- Financing and Investment: SPVs can be used to raise finance more easily through debt or equity, often from institutional investors or lenders who may prefer dealing with a separate entity rather than directly with an individual.
- More choice of Lenders: More Lenders are willing to lend to a SPV Company than a traditional Trading Company.
- Borrowing More: Larger Loans can be obtained through a SPV Company compared to buying a property in your own Personal Name. This specifically applies for those who are Higher Rate Taxpayers.
Get More Tax Relief
You can get Tax Relief under a limited company. It is recommended you speak with an accountant.
Family Planning
You may be able to add additional shareholders including your family members to the company. This will be subject to meeting lenders criteria.
Keep The Profits
You can keep the profits you make in your company. This can then be used to help save towards your next property purchase.
Larger Loans for Higher Rate Tax Payers
Limited Companies are able to get larger loan sizes than Individuals who are paying higher rate tax above £50,000. This is because Companies are only taxed using the lower rate of Incorporation Tax which is currently 19%.
Inter-Company Loans & Directors Loans
As SPV's have no trading history to begin with. A deposit is needed to acquire the property. Aside from using your own cash funds, you can also use an Inter-Company Loan or Directors Loan from your existing trading business. Tax Advice is recommended.
Joint Venture Mortgages
You can also easily set up a company with either a spouse, family member, friend or colleague. As companies can allocate shares you can then decide whether you get equal shares or whether some shareholders gets a larger share.
Types of Loans: SPVs can obtain different types of loans, including:
- Buy-to-Let Mortgages: When the SPV owns rental properties, the loan might be secured against the property itself, and repayment will come from the rental income.
- Development Finance: For development projects, the loan might cover construction costs and is often structured in stages, with the SPV paying back the loan upon project completion or property sale.
- Bridging Loans: Short-term loans that can help the SPV finance a project until long-term financing is arranged.
Lenders typically secure the loan against the property owned by the SPV, meaning the lender has the right to take possession of the property if the SPV fails to repay the loan.
SPV lending is a way to provide financing to a legally separate entity designed for specific purposes such as property ownership or development. It is commonly used in real estate to isolate risk, facilitate tax advantages, and raise capital, while also providing more tailored lending options for investors and developers. However, it requires careful structuring and consideration of the legal and financial risks involved.
Your guide to Limited Company Buy-to-Let Mortgages
- SIC code 68100 is for the buying and selling of own real estate; so, if you’re going to be flipping and trading, this would be the code for you
- SIC code 68209 is for the letting and operating of own or leased real estate. In other words, for buying and holding property and renting it out
- SIC code 68320 is for the management of real estate on a fee or contract basis