How Just Mortgage Brokers Can Help You
Choosing whether to buy a property as an individual or through a limited company is a decision that can impact the yields of buy-to-let property investors.
The recent changes to buy-to-let mortgage interest tax relief and the stamp duty hike on second homes means more and more buy-to-let investors are thinking about switching to a limited company.
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What is a Ltd Co Buy to Let Mortgage?
If 2016’s changes to stamp duty and buy-to-let (BTL) mortgage interest tax relief have made growing your portfolio more expensive, you may have considered registering as a limited company.
As a limited company it is possible for landlords to avoid losing out on tax relief. While limited companies have their own pros, cons and costs to weigh up, many individuals working with property are now choosing to change their approach and register in this way.
That is where limited company Buy to Let mortgages come in.
In reality, a limited company BTL mortgage is almost identical to a regular BTL mortgage which you may have used as an independent landlord. The crucial difference lies in how lenders appraise your suitability for your loan.
Many high street mortgage providers are less willing to lend to limited companies, as they perceive them as riskier prospects. As many “limited companies” seeking this type of loan are in fact self-employed landlords, the chances of business failure are viewed as more significant. This can make sourcing a limited company BTL mortgage a potentially trickier process.
Fortunately, as the numbers of landlords choosing to register as limited companies rises, so too do the number of mortgage options and providers available to them. These lenders will look far beyond the basics of your limited company business, instead delving into details including your personal financial history and your personal income situation, in order to gain a true picture of your suitability for a mortgage.
Growing Popularity of Ltd Co Buy to let
In recent months, specialist brokers have seen a surge in the number of applications for buy-to-let mortgages from limited companies as landlords look for a way around the changes. Investors are increasingly using corporate structures to access loans due to the tax efficiencies associated with this approach. This is particularly the case for higher rate tax payers, or those who have been tipped into the higher tax bracket by the recent changes.
What are the benefits of this approach?
Setting up a buy-to-let limited company does not just benefit investors with a substantial portfolio of properties. When you hold a property through a limited company you pay corporation tax on the profits made. If you leave the profits in the company, this is the only tax you will have to pay. This could represent a significant advantage for some when compared to owning property personally.
Is this type of mortgage hard to find?
As the demand for limited company buy-to-let mortgages has increased, so has the number of products available. As a mortgage broker that specialises in this field, we know exactly which lender to approach to find the right deal given your particular circumstances.
Is interest higher?
The level of interest applied to your BTL mortgage as a limited company will vary widely depending on the provider and your personal circumstances. In some cases, rates will be higher than a standard buy to let mortgage as this is still viewed as a more risky product, but with some groundwork, it is possible to find competitive interest rates on fixed, tracker and variable mortgages from specialist lenders.
How can we help?
- - What SIC codes do I need for the limited
- - Can I use my existing limited company?
- - How many properties can I hold within a
- - Do I need to set up my limited company
before I can apply for an
Agreement in Principle?
- - Can I transfer my property from sole
ownership to the limited