It wasn’t more than a few short years ago that obtaining a buy to let mortgage for a limited company was relatively simple. Many high street and specialist lenders were interested in attracting landlords who had set up property owning, managing and letting businesses. With all the restrictions in place to protect lenders – the security of the property and personal guarantees from the borrower – the lending is almost as safe as a regular buy to let mortgage. It is perhaps simply a combination of the slight complexity and a shortage of funds pushing lenders away from what was once a popular and profitable lending category.Many lenders who understand that professional landlords who have taken time to plan their portfolios and optimise for tax are a lower risk to the lender. Not only will an experienced, professional landlord be more likely to make good decisions such as selecting property location and tenants more effectively than a rookie, but an experienced landlord is likely to have suitable rent insurance for his portfolio. Even those landlords without sufficient cover for rent arrears and voids will find experience is no end of help when managing their arrears cases themselves.
For these reasons we find a market where there are less choices for limited company mortgages – none really on the high street except for uncompetitive business loans. However we find that market is full of competition from specialist lenders who understand the unique opportunities that experienced landlords looking to borrow using a limited company vehicle offer.
Types of Company Able To Apply For a Limited Company Buy To Let Mortgage
In the past there was definitely more choice of rates and lenders for Limited Company Buy to Let landlords. However almost all lenders required a special purpose vehicle – expecting to see Sector Industry Codes of 7020. This is one area where we have seen some movement and now landlords have access to lenders requiring an SPV and those who will accept trading companies that also own property.
What Loan To Value Can Be Achieved
With an SPV up to 75% can be achieved. For trading companies 65-70% loan to value can be achieved depending on the specific details of the case. Some landlord experience is usually required for loan to values over 70%. Product LTVs are subject to frequent change so it might be a good idea to call in if you are reading this article more than a few months after publication.
Typical Rental Cover and Restrictions
Experienced landlords will receive more generous criteria when it comes to assessing the level of rent that will be required to advance their mortgage. Landlords should be careful to pick property that offers good long term rent stability and yield and 130% of 7% of the mortgage would be a good guide. For example if we borrow £100,000 rent of £758.33 (100,000 * 0.07 * 1.3 / 12) would be a good guide for Limited Company landlords to aim for to protect themselves against interest rate volatility.
[note class=”accept”]ProBuyToLet sources competitive whole of market Limited Company Buy to Let Mortgages from well known high street lenders to specialist broker only lenders. Our experienced advisers only deal with commercial and buy to let finance so we’ll be sure to get you the best deal.[/note]