[col type=”one-third”]
Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
[/col]
[col type=”two-third last”]
Question
Lending to a limited company
How easy is it to find a lender willing to lend to a limited company? I have recently set up a company in order to comply with new buy-to-let guidelines on owning four or more properties and wondered what the landscape was like before I added to my portfolio. Would I need a specialist lender or will I be eligible for the same mortgages as previously?
Answer
According to the Buy to Let Mortgage Index published by Mortgages for Business, there were 1,571 buy-to-let mortgage products on the market in Quarter Three 2018, and with 22 of the 41 lenders tracked offering rates to landlords using limited companies, you can see there is plenty of choice.
Most of these rates will only be available via a broker so do get in touch if you need some help with finance. It’s worth noting that the very lowest rates on the market are only available from lenders who don’t have products for limited companies, so you may not be eligible for all the rates but there is still plenty of choice and pricing remains competitive.
[hr style=”single”]
Question
Which documents will I need?
I am about to put in an offer on my first buy-to-let property and I would like to know, so I am prepared, what information lenders will need from me before I apply. I have been through the mortgage process with my own property, so I understand I need passports, bank statements etc – but are there any additional pieces of information I will need as a buy-to-let customer and if so, what?
Answer
The documentation required will depend on what the lender wants to see, how you plan to borrow, (i.e. personally or using a limited company), and your official landlord classification, (i.e. portfolio or non-portfolio landlord).
If borrowing personally most lenders will ask for:
• Proof of identification – i.e. passport, driving licence, proof of residency if you’re not a British citizen
• Proof of address – i.e. a utility bill that’s no more than two months old
• Proof of income – i.e. if employed three months’ payslips, if self-employed SA302 which is a statement of earnings from HM Revenue & Customs. You’ll also need provide three to six months of bank statements
If you’re borrowing via a limited company (which can be more tax efficient) in addition to the above, you need to provide:
• Company name and registration number
• Three to six months’ bank statements for the company
• Details of all the company directors and shareholders
• The latest set of trading accounts (If the company trades as well as holds property)
Further down the line, if you go on to become a portfolio landlord, i.e. a landlord with four or more mortgaged buy-to-let properties (including those held within a limited company), you’ll also need to provide:
• Details of your entire portfolio, i.e. address of properties, value of properties, details of all outstanding mortgages and rental income
• Cash flow forecast
• Simple business plan
You will also need to provide the lender with the details of your chosen solicitor.
[hr style=”single”]
Question
Holiday let mortgage
Do I need a buy-to-let mortgage if I wish to purchase a property as a holiday let? I have found a property in a coastal town, but I haven’t decided yet whether it would be more lucrative as a buy-to-let or holiday business. But would I need a buy-to-let mortgage for both options?
Answer
Mortgages for holiday lets tend to sit with the more commercial lenders although with rise of websites like Airbnb, some buy-to-let lenders will allow it. Currently there are only eight or so active lenders in the holiday let mortgage market and mostly they will underwrite the properties based on rental income generated through standard assured shorthold tenancies (AST) agreement rather than the income from holiday bookings. They also prefer the property to already be an established holiday let.
Many lenders will also require the borrower to have an earned income (i.e. not from rent) of between £10,000 and £40,000. If you are already a landlord, the lender will take a close look at your personal expenditure, cross-referencing tax returns and rental bank statements to ensure that you can afford the loan. Do get in touch if you would like to chat through the options with one of the advisers on our commercial desk – they have direct access to the lenders you will need.
[hr style=”single”]
Question
New Build Property
Is it possible to get a buy-to-let mortgage on a new build property and, if so, is there anything I need to consider? There is a new build estate being built in my town and I am very tempted to purchase one as they look pretty decent. There’s lots of interest so I might need to buy off plan. Would this cause any problems?
Answer
Most buy-to-let lenders are comfortable lending on new build houses. Whilst flats aren’t quite as easy to mortgage it’s by no means impossible. Either way, lenders will want to see the builder’s warranty certificate.
Off-plan is much more problematic and a higher risk strategy. This is because mortgage offers usually expire after three to six months which often isn’t long enough when buying off-plan. So you may find yourself in the position of having to apply for another mortgage. And if you don’t get it – you could lose any deposit monies you may have paid. Do get in touch if you’d like to explore this option in greater detail.
[hr style=”single”]
[/col]
