Buy to let mortgage for IT contractor using inter-company loan as deposit

We were approached by a self-employed IT contractor looking for finance to purchase his second buy to let property. On the advice of his accountant, he had set up an SPV limited company to use as the borrowing vehicle.

The property in question is a two-bed terraced house in the Midlands and the client was hoping to use a loan from his IT business as the deposit. Most buy to let lenders will not accept these circumstances, known as related transactions, because they require a greater than normal level of understanding to underwrite.

As whole of market brokers we know which lenders will consider these deals and approached a specialist provider with which we have worked numerous times on similar scenarios. The lender agreed terms on one condition: that the client provide confirmation from his accountant that the future trading ability of the IT company would not be adversely affected by the loan. The letter was promptly obtained and the deal went ahead without further incident. Here are the details:

Property Details

Property value: £97,000

Loan amount: £72,750

LTV: 75%

Rate: 3.39% 5 year fixed

Term: 25 years interest only

Borrower: SPV Ltd Co

RTI: 125% @ 3.39%

Lender arrangement fee: £1,455 (2%)

Rental income: £525 pcm

Mortgage payment: £209 pcm

Gross yield: 6.5% pa

Consultant: Chris Longhurst, 01732 471607

If you're a contractor looking for help with a buy to let mortgage, feel free to call me directly or you can call the main line on 0345 345 6788.

19th September 2017