Difference between Ltd and SPV Ltd

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    Difference between Ltd and SPV Ltd

    Hi, I have 2 BTL's a the moment in my own name, and want to set up a Ltd company for further purchases, probably HMO's, however I have just been googling and found out that an SPV Ltd company may be a better a choice, as there seems to be more mortgage products available. I've googled btl 'things' an awful lot over the last year or so, so i am surprised I have only heard of this 'SPV' thing now. So is this true? Is their any difference in the way they function, or any difference from an accounts point of view? Would I be better setting up an SPV ltd company, rather than a normal Ltd company? How do I do it? Are there any negatives? Any advice would be good.

    Thanks for your advice :-)

    #2
    This explanation by MBF may help you to understand SPV Ltd :

    http://www.mortgagesforbusiness.co.u...mited-company/

    Comment


      #3
      As a broker the first thing to take account of is that the vast majority of lenders will only accept SPV's rather than a general trading company. The latter is always vulnerable to issues arising from activities outside the individual properties. Each type of Company setup has what is termed a SIC code and it is this which needs care in having the right code in place as lenders automatically check on the Company House register to ensure that it meets with its lending criteria to a Limited Company.

      Comment


        #4
        I presume the company articles also need to prevent its use as a trading company, as it seems to me there is little or no checking on SIC codes.

        Comment


          #5
          Thanks for all your help. The mortgage on my own home is coming up for renewal in 1.5yrs, and I was hoping to release some equity to help fund more btl deposits, but if i had a ltd company i wouldn't have took any profits out as a wage, i would have reinvested it in extra btl deposits, so would that go against me from a point of lending against my own house (as I want to release as much equity as i can from my own home), as if i'd bought extra btl's in my personal name, any profits would show as income, when trying to prove how much i earn.

          ? Help ?

          Comment


            #6
            It would not have an adverse affect on your personal borrowing , any loans funded via a Ltd Company do not come into the affordability equation given that the asset is owned by the Company with you and anyone else as director/shareholders.
            You make mention of wanting to release monies when your present loan incentive expires but this does not automatically necessitate a Remortgage with all the possible associated costs. The question is does your present lender offer a switch product which might be slightly more expensive than that for new mortgage applications but cheaper than reverting to the Standard Variable rate. If they do then the next question to ask is do they permit Further Advances and allow the monies to be utilised for further property acquisition if yes then you might be able to take advantage of such a facility now whilst rates are low and without disturbing the existing product incentive and is pertinent given that rates will not be at their present level in 18 months time.
            There may be features which might prevent you doing the above but it is an option to investigate particularly as you could then lend the monies as a directors loan to the company to allow it to help fund the next acquisition.

            Comment


              #7
              Originally posted by leaseholder64 View Post
              I presume the company articles also need to prevent its use as a trading company, as it seems to me there is little or no checking on SIC codes.
              I used the government's model articles, which don't prevent trading. Also the SIC was refistered until the first lot of accounts - after the company had existed for a year and several months after the first mortgage was granted.

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