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SPV Limited Company Mortgages

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 16th October 2019 *

We get lots of enquiries about special purpose vehicles (SPVs). Perhaps you’re looking to invest in a buy-to-let property and want to know if using an SPV can help you be more tax efficient? Or maybe you’re a director of a limited company and you want to use an SPV to keep your personal assets separate from your business?

If the answer to either of these questions is yes, then this article is for you. 

To give you as much information about SPVs, we’ve collated the key information you need to know and you’ll find the following topics covered below…

If you’d like to get advice on special purpose vehicle mortgage for a buy-to-let property, call us on 0808 189 2301 or make an enquiry

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What is a special purpose vehicle and how can it help property investors?

If you’ve looked into property investment then you might have come across the term SPV. But what does it mean? 

Simply put, a special purpose vehicle is a legal entity (usually a limited company) that is set up as a fenced organisation. Having an SPV allows property investors to apply for a buy-to-let mortgage as a limited company rather than in their personal name.

What are the uses for a special purpose vehicle?

Tax relief is a usually a big appeal for landlords who are considering buy-to-let mortgages via an SPV. Whether you have a small or large property portfolio, the tax benefits of buying property through a limited company can be huge, especially if you pay the higher or additional rate of tax.

The property deposit can be loaned to the SPV company as a director’s loan, offsetting any profits from rent payments until the debt is repaid, thus reducing the SPV company’s corporation tax liability.

As the SPV tax liability is considered separate from your personal tax liability most lenders will offer a more generous rental calculation which means you could borrow more for a given monthly rent.

SPV company mortgages can also be used if you want to buy property as a group rather than as an individual. This can make it easier to divide shares and assign financial responsibility for the mortgage repayments.

As well as this, having an SPV separates any personal property (perhaps a family home) from a property used for business (buy-to-let).

Most reputable brokers would recommend that you discuss your circumstances with a tax advisor before setting up an SPV. Make an enquiry for more information. 

What are the requirements for an SPV BTL mortgage?

Every lender has their own set of SPV mortgage criteria that they’ll use to determine whether or not they’ll approve your application, so try not to feel disheartened if one lender rejects you, though this doesn't necessarily mean that all lenders will.

A lender may ask you questions about:

  • How many properties you own personally and in a limited company structure
  • The number of directors on the application (with most lenders there is a max of four)
  • How many shareholders the company has
  • Your credit history
  • The property type
  • Where the property is located
  • The loan-to-value of the property

How do I get an SPV for a buy-to-let?

If you’ve never been a landlord before, your borrowing options can be more restricted. This is because some lenders will view inexperience as a risk, as they want to be certain that you can find tenants, maintain the property and pay back your mortgage.

This doesn’t necessarily mean that you won’t be able to get a buy-to-let mortgage with an SPV. With some lenders, but not all, you may be asked for a larger deposit or have to pay a higher rate of interest on your loan. They may also assess your personal income as part of the application.

Will the property type affect my SPV BTL mortgage?

With some lenders, unfortunately yes. Properties that are deemed as a higher risk to lenders can be harder to mortgage because in the event of repossession, some buildings are more difficult for lenders to resell and make their money back.

Such buildings can include:

  • High rise flats / tower blocks
  • Properties above a shop 
  • Prefabricated concrete (prefab)
  • Properties made out of wood/timber
  • Thatched roof houses
  • Corrugated iron

The good news is that there are lenders that are happy to consider a wide range of property types, including non-standard constructions, for buy-to-let mortgages with SPVs. Make an enquiry and we’ll connect you with an advisor for a free, no-obligation chat. 

How do I set up an SPV limited company?

If you want to get an SPV to apply for a buy-to-let mortgage in the UK, lenders require you to register as a new company at Companies House. It must be registered in the UK and it also must be buy-to-let. You can do this by: 

If you haven’t yet done so, you can do this by: 

  • Setting up the company on Companies House yourself.
  • You’ll need to choose what’s known as a SIC code from the Condensed SIC list. Your SIC code is used to classify the nature of your business, for example real estate.

If you need assistance, or already own your own company, the experts we work with will be able to provide guidance. Make an enquiry to get started. 

How much deposit do you need for an SPV mortgage?

Usually, loan-to-value ratios start from 85% for buy-to-let mortgages, but BTL deposit sizes can vary depending on the lender’s criteria and appetite for lending to someone with your circumstances. 

For instance, a larger deposit may be required if you have bad credit, are a first-time buyer or already have a portfolio of 3 or more properties.

Say for example that a property has a value of £200,000 and a lender offers you an LTV ratio of 85%. This would mean that you need a 15% deposit of £30,000 would be needed to secure your mortgage (as well as passing their SPV mortgage criteria).

To truly understand how much deposit you may need with a specific lender, talk to a mortgage advisor who can take the time to look at your situation, find lenders who will accept you and then calculate your deposit size.

SPV buy-to-let mortgage rates

Generally, the cheapest buy-to-let rates are not available to limited companies. That being said, there are specialist mortgage lenders who offer specific mortgage rates to SPV borrowers, and they can be favourable if you know which provider to go to.

The process can be a lot smoother with an experienced SPV mortgage broker who can find and compare the best mortgage rates and deals for you.

Always check that your broker has dealt with SPV buy-to-let mortgages before though. Some brokers claim to be ‘whole of market’ meaning that they deal with every type of mortgage but when it comes to specialist areas like SPVs, they lack the knowledge needed to recommend the right lenders. This can often result in high-interest rates or even applications being rejected.

Make an enquiry and we’ll match you with a broker that specialises in SPV mortgages.

Which mortgage lenders accept SPVs?

Many high street lenders reject buy-to-let mortgages with SPVs because they see them as more complicated. This results in many lenders sticking to mainstream mortgages, which might tempt you to consider personal borrowing.

However, the government tax changes have resulted in growth in the SPV mortgage market over the last few years so many more lenders have started offering SPV products. This added competition means more choice and better rates for SPV borrowers.

Even in situations where you have been rejected by lenders (such as Paragon or Aldermore) and think that an SPV limited company mortgage is unattainable, you should always seek advice.

There are lenders who are happy to approve buy-to-let mortgages through a special purpose vehicle  in the right circumstances and some of the advisors we work with regularly arrange mortgages with them.

Why you should speak to an SPV mortgage broker

A good SPV mortgage broker will already know a good selection of lenders who are more likely to approve you, which saves you time and can help avoid a mortgage rejection. This can also help you avoid paying more than you should in interest and fees.

To find an SPV lender, talk to one of our advisors here.

Speak to an expert about SPV mortgages 

If you have questions about SPV mortgage lending call us on 0808 189 2301 or make an enquiry

We’ll match you with one of the experts we work with who can advise you on your next steps and find the best products for your circumstances. All advice is free, there’s no obligation to make a purchase, and there’s no marks made against your credit rating. 

Updated: 16th October 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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