Thursday, May 18, 2017
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Metro Bank is offering some of the most competitively priced limited company mortgage rates to professional landlords.
They are available to limited companies, LLP’s and professional individual investors. The maximum loan-to-value is 75% and it is calculated on an aggregated portfolio basis.
Metro’s cheapest rates are two and five-year trackers and they are available up to 65% loan-to-value. Both are priced at 3.09% (2.84 over the Bank of England base rate). The overall cost for comparison on the two-year tracker is 4.3% APRC and 4.1% APRC on the five-year tracker.
The two-year rates have 1.5% arrangement fees, although three and five-year fixes are available. Unusually, the five-year tracker has a three-year tie-in period.
Aaron Strutt, director at Trinity Specialist Finance, says: “Professional landlords are refinancing their portfolio’s to switch to lower rates and generate funds to reinvest into the property market. Other landlords are working out if they need to restructure to be more tax efficient.
“Some clients borrowing through limited companies may need to lock into a longer term fixed rates and the bank is likely to require full personal guarantees from all of the directors and shareholders. Limited company lending is increasing in popularity and some of the banks are hiring extra staff to manage demand.”
The minimum size per property to qualify for a professional landlord product is typically £250,000 and the mortgage is available on an interest-only basis for a maximum term of 25 years. Arrangement fees vary between 1.5% and 2% of the loan amount.
Many SPV's and LLP's are straightforward but if they are offshore Metro Bank will ask to see the company structure. The bank can lend to foreign clients providing they are paying tax in the UK.
Buy-to-let rental calculation
Metro Bank will take an aggregated view on property portfolio’s to assess affordability. It will check the loan-to-value and the over rental income using a rental calculation 125 at 5.5% or 2% above pay rate (whichever is higher).
For Limited Companies and LLP’s the calculation is higher at 140 at 5.5% or 2% above the pay rate (whichever is higher) for professional individual investors.
The rental income is typically confirmed by the surveyor, however where there is an existing Assured Shorthold Tenancy agreement in place, this can be used.
Coverage area
Metro Bank has expanded its lending area and does not concentrate on London anymore.
With new build properties increasing in popularity, the bank increased its maximum loan-to-value from 60% to 75%.
To secure a limited company buy-to-let mortgage call Trinity Specialist Finance on 020 7016 6151.
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