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SPV Buy to Let Purchase Using an Intercompany Loan

SPV Buy to Let Purchase Using an Intercompany Loan

The Client: A self-employed business owner with three buy to let properties looking to purchase his fourth.

The Property:
A three-bedroom semi-detached residential house located in the North West. The property has excellent access to local amenities and fast transport links to surrounding cities.

The Finance: Using a 25% deposit from funds saved in his Trading Limited Company, our client required a 75% LTV mortgage to complete the purchase.

The Challenge: The initial challenges for this case were criteria based. Firstly, the fact this purchase would qualify our client as a portfolio landlord restricted our choice of buy to let lenders from the start. Secondly, although a completely legitimate deposit source, some lenders are uncomfortable underwriting intercompany loans as it is a more complex structure than the usual director’s loan. Despite these complexities, we knew several specialist buy to let lenders would accept the case and collected all the financial documentation we’d need to prove the intercompany loan’s legitimacy, which would help speed up the process.

 

The Solution: Having identified a competitive mortgage rate with a reliable specialist buy to let lender, we were keen to proceed so our client to secure the purchase. Unfortunately, due to COVID, our client’s Trading Limited Company had diminished income, which didn’t quite meet our desired lender’s minimum income requirement. To overcome this, we were able to put a case together that combined income received from our client’s Trading Limited Company and the rental income from his other buy to let properties to meet the lender’s minimum requirement. Once we’d submitted all the documentation, the lender was happy to proceed with the application, and our client’s purchase was fully secured. Here are the details:

Property Details

Property value: £163,000

Loan amount: £122,250

LTV: 75%

Rate: 3.50% five-year fixed

Term: 25 years, interest-only

Mortgage payment: £375 per calendar month

Lender arrangement fee: £299

Rental income:  £800 per calendar month

Application:  SPV Limited Company

Consultant: Rob Gurr, 01732 471673

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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Mortgages for Business Ltd is registered
in England and Wales No. 2502713.

Registered office:
17 Kings Hill Avenue,
Kings Hill, West Malling,
ME19 4UA.

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Mortgages for Business Ltd is authorised and regulated by the Finance Conduct Authority (No. 313537) to transact regulated mortgages. We are a credit broker, not a lender. We work with the whole of market in sourcing a lender for you; we may receive a commission from the lender, and this amount varies between lenders. The FCA does not regulate some investment mortgage contracts. Mortgages for Business Ltd is a founding member of the National Association of Commercial Finance Brokers, the body that promotes best practice within the commercial finance industry. Telephone calls may be monitored or recorded for training purposes.

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