Finance4 a limited company mortgage

Limited company mortgage advice from the experts at Finance4

Many businesses are run through a limited company, a buy to let portfolio could also be operated in this way using a limited company mortgage to fund the property purchase. A limited company is a separate legal entity, and so if the company is wound up the directors of the company have no personal liability for the limited company mortgage.

We believe it essential take advice from a an accountant before going down the limited company mortgage route. Whilst a limited company mortgage will give you a degree of protection and possibly some tax benefits, there are drawbacks to a limited company mortgage.

The negative aspects of a limited company mortgage:

Very few lenders will offer a limited company mortgage, which means less competition and so higher interest rates. If as well as being a limited company you also have an unusual property, for instance a multi let to asylum seekers (for which you would need an HMO mortgage) you may end up with only 2 possible lenders. With some lenders you will lose one of the main advantages of a limited company mortgage as they will insist on directors personal guarantees, or alternatively they will only allow a maximum of 70% loan to value without the guarantees.

Some limited company mortgage lenders:

MORTGAGE EXPRESS require the company to have one of the following SIC codes: 7011, 7032, 7012, 7020, 7031. Directors guarantees required for a limited company mortgage up to 85%, special products available up to 70% without guarantees.

PARAGON require directors guarantees and for the directors to be resident in the UK for tax purposes, and that the limited company be incorporated for the principal purpose of buying and holding residential investment property.

CAPITAL HOME LOANS will allow a limited company mortgage for general trading companies, up to 90% LTV with directors personal guarantees. Will also allow mortgages to ltd co's that are subsidiaries of another ltd co.

BATH BUILDING SOCIETY will consider a limited company mortgage for businesses registered offshore for tax purposes, and will also allow general trading companies.

MORTGAGE TRUST property companies only, with full directors guarantees.

WOOLWICH require directors (max 4) guarantees and that all major shareholders appear on the application for a limited company mortgage.

Confused. Call Finance4 for expert limited company mortgage advice 0800 019 9605