Company Investment Mortgage
Company Investment Mortgage | A Viable Option For Landlords
A company investment mortgage may be a good option for some landlords. There are certain advantages to a company investment mortgage. Here's what you need to know to consider if a company mortgage is right for you.
One of the main reasons that landlords choose to set up a limited company and go for a company mortgage is because there are tax savings to be made. This is particularly important if you are a higher rate taxpayer, paying 40 per cent tax on your earnings. The tax paid by companies is set at a lower threshold, so this could represent a big saving, putting more money in your pocket. Most landlords would choose to go for a mortgage investment for this reason alone.
Although this may not be a good option for standard rate taxpayers, there are other advantages. One of these is the ability to buy and sell property without attracting capital gains tax. Although there will be some tax to be paid, this type of transaction will be included under normal company activity, so savings can be made there as well. This is another reason to have a company investment mortgage.
A third important reason to consider a company investment mortgage is that it will extend your reach as a landlord in terms of buying and selling. You will be able to buy and sell large property portfolios very easily and you will probably be able to arrange larger loans. This could be a major advantage for professional landlords.
Limited Company Setup
In order to get a company investment mortgage, most UK lenders require landlords to set up a special purpose vehicle limited company. This means that this is a company intended solely for dealing in property, with no links to any other company that the landlord might have. With some mortgage deals, landlords might have to provide financial guarantees which make the deal less risky for the lender. If these are provided, the mortgage will usually be cheaper. The good news is that most interest rates are in line with those offered to landlords seeking standard BTL deals.
Choosing a company investment mortgage may limit the range of BTL mortgage deals available as not all mortgage lenders offer this facility. However, we can offer a range of B2L mortgage deals with extremely competitive interest rates some of which are in-line with residential buy to let rates. Fees for these mortgage deals start at 1.25% of the loan amount and increase depending on the interest rate chosen.
There are various mortgage lenders offering this type of mortgage and different deals are available depending on the security offered by the landlord such as financial guarantees. The maximum loan amount is limited to 70 per cent loan to value with interest rates as competitive as any other buy to let deal. Rental cover for this company investment mortgage is in line with standard residential buy to let at 125 per cent.
