Limited Company Buy to Let Purchase for First Time Landlord

Limited Company Buy to Let Purchase for First Time Landlord

15.06.21 | Written by: Rob Gurr

The Client: A first-time landlord purchasing her first buy to let property.  Having sought professional tax advice, she wanted to invest through a newly set up SPV limited company. She was a joint director with a business associate experienced in the rental market.

The Property: A three-bedroom terraced house located in a rural area in the North East of England. While relatively rural, the property benefits from being within walking distance to local shops and transport links.

The Finance:
Using personal savings as a director’s loan deposit, our client needed a 75% LTV buy to let mortgage to complete her first rental property investment.

The Challenge:
Our client came to us very early on in the process and hadn’t yet set up her SPV limited company. We were able to guide her through the setup and advise on all the factors involved. Once this was complete, we were able to turn our attention to the real challenge – a buy to let mortgage!

Even though one director of her SPV limited company had owned buy to let property, lenders would still view the case as a first-time landlord application. As many buy to let lenders require borrowers to have at least one year of landlord experience, we wouldn’t have the whole of the market to choose from. But, of course, we also wanted to secure the most competitive rate available for her to help increase her yield, the profits of which would fund future purchases!

The Solution: After helping our client set up an SPV limited company, we guided her through the various forms and applications for the mortgage and made sure she knew exactly what supporting documentation we needed and why.

Using our extensive knowledge of the buy to let market, we quickly identified lenders that would consider a first-time landlord limited company application. We compared mortgage rates at 75% LTV to source the most competitive for our client from this list. Having discussed her future plans, we’d agreed that a two-year fix was the best option, as it meant she’d be able to remortgage onto a more competitive rate (not as a first-time landlord) at the earliest opportunity. Doing this would increase her yield and speed up her next purchase opportunity.

With a suitable rate found, we approached the lender and explained our client’s circumstances. Comfortable that although she was a first-time landlord, she had support from a more experienced investor, they were more than happy to accept her application and proceed with the case! Our client is delighted to have made the first step in her buy to let portfolio journey. Here are the details:

Property value: £72,500

Loan amount: £54,375

LTV: 75%

Rate: 2.94% two-year fixed

Term: 25 years, interest-only

Mortgage payment: £580 per calendar month

Lender arrangement fee: 2% added to the loan (£1,087.50)

Rental income:  £156 per calendar month

Application: SPV Limited Company

Consultant: Rob Gurr, 01732 471673

ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

NB: ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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