Remortgaging Advice

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    Remortgaging Advice

    Hi everyone,

    I run a small limited company that wholly owns a rental property with no mortgage.

    We are looking to expand our portfolio and would like to do this by remortgaging our existing property. This property was inherited and has no outstanding mortgage.

    We'd like to remortgage for about 50% of the value of the property.

    My question is, do we need a deposit to remortgage? I can't seem to find a clear answer on this and this is our first time dealing with mortgages etc.

    Any advice would be really appreciated!

    Thank you.

    #2
    When you say you want to remortgage your existing property do you mean the existing property you rent out that is owned by your Ltd Co or the existing property that you live in?
    Either way you won’t need a deposit, the equity you leave in the property is effectively the deposit.

    Comment


      #3
      I am assuming that your Ltd Company is a Trading concern and not a Single Purpose Company set up exclusively to buy , letvand hold residential property for investment. If I am correct it is important to note that not every lender within the BtL sector grants mortgages to Trading Concerns therefore you might need to establish from a broker who will lend and what terms might be available.
      As BTL Investor has correctly stated , remortgaging an unencumbered property does not require any funding on your part, the loan will indeed be based on the strength of the rental income using the lenders criteria for Ltd Co’s , which tends to be lower than if it is held in a personal capacity. The terms can be at least 25 years although in most cases the mortgage incentive rate will normally be up to 5 years thereafter reverting to its Standard Variable rate or maybe a loyalty switch rate.
      One word of caution if the company has shareholders who are not directors and have a shareholding between 20% b 25% then they too will usually be required to provide their Personal Guarantees and be underwritten in the same manner as the Directors. Also if it is indeed a Trading Co the lending might insist on registering a floating charge across the company’s assets not just the rental property.

      Comment


        #4
        Originally posted by BTL investor View Post
        When you say you want to remortgage your existing property do you mean the existing property you rent out that is owned by your Ltd Co or the existing property that you live in?
        Either way you won’t need a deposit, the equity you leave in the property is effectively the deposit.
        Hello, thanks for your reply! We would be remortgaging the property that we rent out, owned by the limited company. Thanks for the info, that's what I had suspected.

        Comment


          #5
          Amazing. Ltd company inherits house.

          Could happen, but not common.
          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

          Comment


            #6
            Originally posted by loanarranger View Post
            I am assuming that your Ltd Company is a Trading concern and not a Single Purpose Company set up exclusively to buy , letvand hold residential property for investment. If I am correct it is important to note that not every lender within the BtL sector grants mortgages to Trading Concerns therefore you might need to establish from a broker who will lend and what terms might be available.
            As BTL Investor has correctly stated , remortgaging an unencumbered property does not require any funding on your part, the loan will indeed be based on the strength of the rental income using the lenders criteria for Ltd Co’s , which tends to be lower than if it is held in a personal capacity. The terms can be at least 25 years although in most cases the mortgage incentive rate will normally be up to 5 years thereafter reverting to its Standard Variable rate or maybe a loyalty switch rate.
            One word of caution if the company has shareholders who are not directors and have a shareholding between 20% b 25% then they too will usually be required to provide their Personal Guarantees and be underwritten in the same manner as the Directors. Also if it is indeed a Trading Co the lending might insist on registering a floating charge across the company’s assets not just the rental property.

            Thankfully we are set up as an SPV! That’s good, thanks for the info! We have some money set aside but would rather use this to add value to a property or cover mortgage payments if tenants don’t pay. Shareholders is something we’d have to look at as my 7 year old brother is a shareholder and obviously doesn’t have any income.

            Comment


              #7
              Originally posted by theartfullodger View Post
              Amazing. Ltd company inherits house.

              Could happen, but not common.
              Haha, we inherited the house but transferred ownership to a limited company.

              Comment


                #8
                Haha , I doubt if 7 year old brother can be asked to give personal guarantee for the loan.

                Comment


                  #9
                  The solution is to keep his share to below 20% and the lenders won’t make it an issue

                  Comment

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