Friday, February 17, 2017
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Limited company buy-to-let rates are getting better as mortgage lenders fight it out to attract more landlords.
With so many landlords with property portfolios considering transfering their buy-to-let businesses into limited companies, lenders are improving their rates to tempt them to take action.
Aaron Strutt, a director of Trinity Specialist Finance, says: “Specialist lenders have been providing limited company mortgages for a while, although the rates have been expensive. We are at the point where more of the banks are offering competitively priced fixed and tracker limited company rates.
“Just like any other mortgage, if you are looking for a limited company rate you need to do your research and ensure you are getting the best rate with the lowest arrangement fees. We have access to lenders offering higher rate tax payers two-year fixes from 3.25% and five-year fixes from 3.75%.”
How do you qualify?
To qualify for a limited company buy-to-let mortgage, many lenders expect companies to be registered and trading in England, Wales or Scotland. They also require the directors to be resident and liable to tax in the UK for the last two years.
Lenders accept Special Purpose Vehicle’s but they often want them to be UK-based and have up to four directors. They can consider Limited Liability Partnership’s for buy-to-let properties.
The principle use of the company should be to purchase and hold investment properties. As part of the mortgage offer conditions, company directors will need to provide personal guarantees on a joint and several liability basis, especially for larger portfolios.
Speak to your accountant
Despite protests against the introduction of the new tax rules, it seems unlikely there will be any immediate changes and landlords will be subject to the addition taxes. Higher rate tax payers will be the most affected.
To work out if you should transfer your property into a limited company, initially it makes sense to find out what rates you would qualify for and then speak to your accountant and get tax advice.
There is still confusion about tax changes and many landlords do not know if limited companies are appropriate for them. If you are not sure about the advice your accountant has given you, get a second opinion.
Rental calculations
Mortgage lenders work out the maximum buy-to-let loan sizes using the rental income generated from the property. However, since the Prudential Regulatory Authority introduced rental calculation caps at the start of the year the market has changed.
Most banks and building societies have different rental calculations, and the maximum loan sizes can range dramatically.
Trinity Specialist Finance has access to a range of lenders offering more generous rental calculations.
Complicated property portfolios
If you have a property portfolio and you have mortgages with a host of different lenders, it is possible to transfer your whole portfolio to one provider. If you have a mixture of properties like Multi-Unit Freeholds or HMO’s – Trinity can approach a more appropriate lender on your behalf.
To secure a limited company buy-to-let mortgage, call Trinity Specialist Finance on 020 7016 6151.
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