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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
How make my buy-to-let business more efficient
I am looking at how to better manage my property portfolio – particularly in light of the Capital Gains Tax changes being introduced in April. I’m considering setting up a special purpose vehicle (SPV) – is this suitable for buy-to-let and is it easy to set up?
Answer
An SPV is just a regular company with the sole purpose of holding and letting property. This makes it very easy to set up and can be a great option for buy to let ownership.
If you are seriously considering this option, I would urge you to speak to a professional tax adviser before making any property investment decisions. They can let you know whether this would be beneficial to you, both for new purchases but also for any properties you currently own.
I would add that if you wanted to move your existing properties into the SPV, then you may be liable for capital gains tax and stamp duty, hence the importance of speaking to a tax adviser.
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Question
What’s a bridging loan and how easy it is to apply for one?
I’m planning to purchase a property at auction in the New Year, renovate and then either flip it or rent it out.
With mortgage rates and house prices so uncertain I’m going to hedge my bets on this so I need your advice on financing options, please.
I realise a buy-to-let mortgage is the standard option if a house is to be rented out – but as I may flip it I wondered if a bridging loan might be a good idea. How long might a bridging loan last, can I borrow the same amount of money as I would for a mortgage and is it easy to apply for?
Answer
Bridging loans are brilliant for certain types of transactions, and it certainly feels like this could be a great option for you.
Bridging loans can last up to two years, are available for up to 85% LTV (loan-to-value) of the purchase price, and are relatively simple to obtain.
However, bridging has some downsides to bridging, like higher costs and more penalties if you do not repay on time.
I would encourage you to speak to a mortgage broker, get a full rundown on the expected costs, and ascertain whether there are any other viable alternatives. Best of luck!
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Question
Fixed rate or tracker mortgage? Which is best for my remortgage?
I’m due to remortgage on my buy-to-let property in May this year – but I’m planning ahead already! I’ve got to make some repairs to the roof and I am planning to insulate the loft too. I would like to get an additional sum of money in the remortgage to pay for this.
With this in mind, and also with the current situation with high mortgage rates making things expensive, are you recommending trackers or fixed-rates? I’m currently on a fixed rate, but perhaps a tracker could make more sense if interest rates start going down next year.
Answer
This is the million-dollar question! Looking at where the market is expected to go, there is certainly a school of thought that either a two-year fixed or a two-year variable product is the way to go.
Personally, of the two, I would ere on the side of caution with the fixed rate option, as there is some nervousness around the latest inflation figures we have seen in the past few weeks.
I am afraid that hindsight will be the thing that tells us what the right choice was! I’d recommend speaking to a whole of market broker who can go through the numbers with you to find the best solution.
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Question
Overseas investor: Can I purchase a buy-to-let in UK?
I was born in the UK and moved to Australia 20 years ago. I own a property in Melbourne, but moved back to the UK last year for work purposes.
We’ve decided to stay in the UK for another couple of years as my work contract has been extended. But we are not sure what the future holds long-term. Therefore we are hoping to buy a house here to rent out for a year or two which, if we decided to stay in England, we can move into.
However, I have never owned a property in the UK. Will this mean I am not eligible for a buy-to-let? I own outright my property in Australia, which had been purchased with a mortgage originally. I still own it and rent it out.
Answer
As you have not owned a property in the UK before, you are classed as a first-time buyer. There are lenders in the market who will offer to first-time buyers on a buy-to-let basis, so your best option here is to speak to a mortgage broker who will be able to advise you of your options.
It’s also important to note that whilst there is a buy-to-let mortgage in place, under the terms of the mortgage, you cannot live in this property.
That would mean that, should you choose to move into this property at any given time, you would need to change your mortgage to a residential mortgage. Again, speak to an experienced mortgage broker to see what your options are.
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