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: