It has been some time since we provided an update on the availability of limited company buy to lets. They are currently available up to 75% loan to value from the mortgage lender Paragon. Paragon are offering a range of mortgage products with a variety of rates and lender arrangement fees.
The limited company must have been set up specifically for the owning and renting out of property, meaning that limited companies trading outside of these classifications will not be accepted. The Directors of the limited company will be underwritten as individuals and will be required to provide personal guarantees whilst the lender checks the state of the limited company for items such as other outstanding debt held in its name.
Examples of the latest product range can be obtained from one of our mortgage brokers and different rates are available at the 65%, 70% and 75% loan to value levels.
Applicants for this type of mortgage must be residential homeowners and have provable minimum income of £40,000. First time landlords are acceptable to the lender although HMOs (House of Multiple Occupancy) and student let properties will not be accepted by Paragon for first time landlords under a limited company scheme. (HMOs and student lets are available for experienced landlords).
Interest rate cover is 125% at 5% or at the pay rate, whichever is higher, based on an interest only mortgage.
Processing times at Paragon are reasonable at present allowing sufficient time to complete on auction properties or repossessions. The lender doesn’t offer a ‘decision in principle’ and they don’t credit score so as long as you have a clean credit history and you meet the rest of their lending criteria your mortgage application should be successful.
Other criteria that needs to be met:
- Minimum age 21, maximum age 80
- Minimum income of £40,000 per application
- Maximum loan £2m
- Freehold flats acceptable
- Studio flats cannot be less than 30 sqm