[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
How long will a bridging loan application take?
I am in the process of purchasing my second buy-to-let (yes, I am probably mad in this environment, but I have the bug). I am hoping to purchase a renovation project to then rent to tenants.
To do this I need to get bridging finance. Do you know how long it takes to purchase a bridging loan, whether I need a buy-to-let mortgage in principle to obtain one and how much it’s likely to cost?
Answer
Well now, buy-to-let is a great thing to invest in so I don’t think you are mad at all! A bridging loan mortgage offer is usually available in circa two weeks. Completion really hinges on getting the legal work done.
In terms of needing a buy-to-let Approval In Principal (AIP), yes, you may well be asked for one by the bridging lender. A good broker can usually produce one of these for you within 24 hours of receiving the necessary information, so this should not hold things up.
[hr style=”single”]
Question
National insurance – how does this work?
I understand there are many fees and costs (on top of the mortgage interest and tax) to consider when being a buy-to-let landlord. Someone told me I would need to pay National Insurance? How does this work and will I need to start filling out a tax return in order to start making the payments?
Answer
Now, I am not an accountant, but I do own a buy-to-let in my own name and I also own one in a Ltd Company, and I haven’t had to pay national insurance on either.
So the honest answer is that I don’t know, but this would be a new one on me. I would like to recommend that you speak to an accountant who would be qualified to answer this properly.
[hr style=”single”]
Question
Will debt impact my buy-to-let application?
Will I need to undergo a credit check for a buy-to-let mortgage? I have built up a bit of credit card debt recently and am due to remortgage on a buy-to-let property in a few months’ time.
I wondered if this might impact my rate and options? The debt is around £7,000 (to help pay for my daughter’s wedding).
Answer
A buy-to-let mortgage application will entail a credit search. A large amount of debt may impact your credit score but being perfectly honest, if you only have £7,000 and nothing else, plus the rest of your credit file is clean, I can’t see this being an issue for you.
[hr style=”single”]
Question
I want to create a limited company to run my portfolio
I have four buy-to-lets and with all the tax changes I am starting to come around to the idea of creating a limited company to run the properties.
I haven’t dug too deeply into this yet, as I firstly wanted to find out how complex this would be? Initially, I want to get a sense of how the properties would transfer to over to this new entity and whether I would need to recruit other directors etc?
Will any changes need to take place to the mortgages? For example, might I need to remortgage? I currently have three properties with one lender but one is with a different provider… would I need to get them all under one lending roof?
I will no doubt have many other questions going forward, but I hoped you could help me with these so I can see if the effort will be worth my while.
Answer
So there is a lot to cover here… Firstly, let’s look at how you transfer the properties. It is not actually a transfer as the Ltd Company is a separate legal entity to you, and so your Special Purpose Vehicle (SPV) would need to purchase the properties from you.
Therefore, stamp duty on the purchase (with the 3% surcharge) would be payable and you may incur capital gains tax.
It is unlikely that your current mortgage lenders will allow their mortgages to continue so you will need to take new mortgages on each property.
This can be with one or multiple lenders, you would just need to see who can offer you the best deal. Transferring properties into an SPV is a fairly niche process so please do make sure you are speaking to an accountant and also a broker who understands the Ltd Company buy to let mortgage market so that they can steer you along the right path.
[hr style=”single”]
[/col]
