What is an SPV and how can it help property investors?
SPV stands for Special Purpose Vehicle and is defined as a legal entity as a fenced organisation that is used to isolate financial risk. SPV organisation is termed as a separate company with assets and liabilities that allows property investors to apply for a Buy-to-Let mortgage as a limited firm.
The benefit of this type of structure is that should the mortgagor go bankrupt; then the lender cannot pursue them against other properties held within the SPV. In addition, lenders will only look at the net value of the loan, so even if you have several loans, they will all be treated separately. This means there could still be money available from your existing borrowings after the new one has been taken out. In addition, any future sale proceeds would also be protected because the buyer would need to pay off both debts before taking ownership.
There are many different types of SPV, but typically they fall into two categories; either a general partnership where each partner owns shares in the business OR a Limited Partnership where the partners do not own individual stakes in the business.
Special Purpose Vehicles Limited Company Mortgage
We got a lot of enquiries regarding SPV mortgages in the UK. The point here to note is that if someone wants to apply for a buy-to-let mortgage with an SPV company, they need to register as a new company at companies house. Many mortgage lenders can approve your mortgage application for SPV limited company, but you may need to contact an expert mortgage broker.
SPV Mortgage for Buy-to-Let Property
SPV buy-to-let mortgage rates
Mostly, the best Buy-to-let rates are not available to limited companies, but as we know, every lender’s criteria are different and depend on various affordability. To make this application process smoother, you can contact an expert mortgage adviser who can help you find the best mortgage deal.
FAQs – SPV Mortgages
Can a limited company get a buy-to-let mortgage?
Yes, a limited company can get a buy-to-let mortgage, but you may need to contact expert mortgage advice. In addition, buy-to-let mortgages for a limited company may not be possible from main street lenders.
How to choose the right commercial buy to let mortgage for a limited company?
It would help if you first decided to use a fixed rate or variable interest rate. If you opt for a fixed rate, you’ll usually receive better terms than those offered by a variable rate. However, some people prefer to take advantage of the lower monthly payments associated with a variable rate. You might find that the difference between these options isn’t worth paying extra fees. If you’re looking for a flexible option, consider using a tracker mortgage instead.
How can I find the right buy-to-let mortgage for limited companies?
What does it mean when my bank says, “you don’t qualify for our standard lending products”?
This simply means that your current income doesn’t meet their requirements. They may offer alternative products such as personal unsecured borrowing or secured credit card borrowing. Alternatively, they may suggest that you speak to another provider. It’s important to remember that banks aren’t always able to provide funding for everyone – especially if they haven’t
Will the property type affect my SPV BTL mortgage?
No, the property type won’t affect your SPV BTL mortgage. However, your mortgage advisor will work closely with you to ensure that you obtain the most suitable product for your needs.
What happens if I default on my SPV Buy-To-Let Mortgages?
If you fail to repay your SPV BTL mortgages, the lender can repossess the property and sell it to recover its losses.