We talk about limited company borrowing with clients A LOT at Mortgages for Business. Whilst there is no doubt that this is the right way to invest for many, there are still those who choose not to purchase through an SPV limited company. Jeni Browne offers her thoughts on three key reasons why you might still want to invest in your personal name.
The biggest driver for people opting to use a limited company for their buy to lets is the way you can offset your costs and, therefore, how much tax you will pay. This is primarily beneficial to those whose total income, including gross rental income, pushes them into the higher rate, 40% tax bracket. So, whilst this benefits many landlords, many do not fall into this group and thus would not benefit in the same way.
Although limited company mortgage rates have come down considerably over the last few years, there is still a difference between personal and limited company borrowing, especially on standard properties. Some borrowers (irrespective of the tax implications) are more focused on the cost of borrowing and will transact in their personal names in order to keep the mortgage costs down.
Too Much Hassle
For some, the idea of setting up and then running a limited company feels inconvenient or possibly, daunting. We have plenty of clients who simply take the view that it's much simpler to borrow personally and prefer to do so, and that's completely fine!
If you're not sure whether you'd benefit from investing in buy to let property via a limited company, you must speak to a qualified tax advisor. If you'd like mortgage illustrations to compare options, our team can draw those up for free to help with your decision. As a whole of market buy to let broker, we can source finance for individuals, SPV limited companies, and even trading limited companies.
If you have any questions about buy to let mortgages give our expert team a call on 0345 345 6788 or email firstname.lastname@example.org, and they'll be happy to help.