Ltd Company buy to let mortgage for city centre flat purchase

A longstanding client approached us for a buy to let mortgage so that he could buy a one-bed flat on the first floor of a large, eight-storey block in the centre of Manchester.

On the advice of his accountant, the client, who has a very large portfolio of rental properties, is now making all buy to let purchases through an SPV limited company as this is the most cost effective way of running his lettings business.

The challenge we faced when finding a suitable lender hinged on the fact that the client is carrying forward losses from previous years to minimise his tax liability which means that his tax returns show insufficient income for many lenders which often impose a minimum income threshold of £25k pa.

We took the case to Keystone Property Finance which took a more pragmatic approach.

They could see that the client’s business generated lots of cash and that all of his outgoings were covered. The client was simply following his accountant’s advice in relation to his tax liability.

Unlike some lenders, Keystone’s valuers and underwriters and were also happy to approve the flat as security.

Many lenders steer clear of high rise blocks of flats but the building is centrally located, in a very state of good repair and, the client can demonstrate the successful letting of similar flats within his portfolio.

The client opted for the following deal:

Property value: £101,000

Loan amount: £79,200

LTV: 78%

Rate: 4.49% 3 year fixed

Term: 25 years interest only

Lender arrangement fee: 2% (£1,584)

Borrower: SPV Limited Company

Mortgage payment: £307 pcm

Rental income: £750 pcm

Gross yield: 9% pa

Consultant: Gavin Elley, 01625 416398