As a limited company looking to purchase a residential property, you may be worried about the ways in which this task should be navigated. Luckily, the process of getting a mortgage via a limited company is much easier than when the trend first started in 2016. There are many more options for limited companies and the overall process is much easier than you may think.

At SPV Mortgages, we are experts when it comes to providing SPV mortgages for investment purposes. Our team has come together to highlight some of the ways a limited company can take advantage of the UK property market as an investment opportunity. Keep reading below for more information from our knowledgeable team!

How Is A Limited Company Mortgage Different?

Buy-to-let mortgages for limited companies do differ slightly than those designed for individuals. They are a way to take out a property through a limited company rather than in your own name and are designed for the buying and remortgaging of a residential property to be leased, or will be leased within a month of the purchase being complete.

Compared to personal mortgages for individuals or landlords, a limited company will often find that the property market is much narrower and the interest rates can often be higher. Additionally, different lenders can restrict the number of names on a mortgage – which can also apply to individuals looking to apply too. But not all is lost, since 2016 the market for limited companies has expanded considerably.

Do Lenders Treat Limited Companies Differently?

The short answer is yes. Rather than looking at an individual’s income, a lender will instead look at the overall performance of the company’s assets, in this case, buy-to-lets, taking into account mortgage payments and rental income. This is similar to how personal buy-to-let portfolios are reviewed with high street lenders, however because the portfolio is held in a company structure, the aggregated portfolio stress tests are less strict.  This means you can borrow more, for longer.

On top of this, there is often the legalities involved in limited company properties that can lead to a slow down on sales. While many lenders will now allow solicitors to provide dual representation, there are still some lenders who require their own solicitors. This isn’t something to worry about but it can occasionally slow down the process.

Does The Company Need to Be Old?

While many people believe that a company needs to have been open and trading for a certain number of years in order to get a mortgage, this is a complete misconception – though it is a true fact in regards to obtaining a business loan. However, for mortgages for SPV’s and limited companies, the company itself doesn’t even have to be opened before applying for a mortgage.

This is due to the fact that the company itself isn’t really a relevant factor, rather the directors of the company. Before a mortgage is approved, the finances and lending history of the directors of the company will be combed through in detail to ensure a mortgage can be repaid. A personal guarantee will be taken from the directors of the company, so that if the company itself is unable to pay the mortgage, the responsibility will go elsewhere.

Am I Eligible for a Limited Company Mortgage?

If you’re wondering whether or not you’d qualify for a limited company mortgage, keep in mind that the criteria itself is very similar to that of an individual looking for a buy-to-let mortgage. Here are some similarities:

Rental Income: Lenders will expect your predicted rental yield to be at least 125% of the monthly payments on your mortgage.

Good Credit History: The credit history of the company and directors will be checked when applying for a limited company buy-to-let mortgage.

Age: If company directors are past the typical age of retirement, a mortgage application may be rejected by lenders.

Deposit: A minimum of 20-25% of the mortgage will be required to pay a deposit, and some lenders may ask for even 30% or higher.

For more information on navigating the complexities of a limited company mortgage, SPV Mortgages is here to help! Reach out to our team now for more information and advice.

Contact SPV Mortgages today to find out more!

If you would like to know more, or to find out about the other services we offer, please don’t hesitate to reach out to our friendly, professional team today! We believe in helping you boost your investment portfolio, so choose us to make the most of your mortgage!