Investing into property (first time buyer)

TheLookingGlass

I orginally posted this in the mortgage forum but I think this forum would be more appropriate.

I have some money from inheritance which I would like to invest into my first property, with a long term view of buying further properties down the line. I am currently renting, however in the city where I live appreciation is virtually non existent, meaning that I do not want to invest in a property to live in.

I would like to purchase a buy to let property and have secured a (buy to let) mortgage in principle. However, when discussing this with my father, who has several buy to let properties, he has suggested that if I want to take a long term view and build a portfolio then I should set up a limited company to purchase the property. As I understand it, this would allow rental income to build up within the company at a tax rate of 20% corporation tax, instead of the 40% income tax rate, which I am very close to on my current salary. The rental income can accumulate and be used as a deposit for further properties which would stay within the company.

I am financially stable, have been in my current job role for two years, I have no debts, and I have a good credit rating. However if I was to apply for a mortgage through a limited company then I have read that lenders would want to see the accounts of the company? And since it would be a new company I would not be able to satisfy this criteria.

So the question is whether this is possible?

-New company with no accounts
-Buy to let mortgage
-Company owner is not a home owner
-Company owner has a good credit rating and good salary
-Large deposit of 40-50% of the property value

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Another possibility:

I spoke to a mortgage adviser today who said this would probably not be possible. However, he said that if I would like to go down the route of starting a property holding company then the best route may be to buy the property in my own name, but have the rent paid into the company. Then in a couple years time the company would have valid accounts and I would be able to buy a second property through the company.

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Many thanks for your help, I welcome any suggestions or criticism as to how I am approaching this.

00ec25

the company owner will be required to provide a personal guarantee to underwrite the company's debt. Without another property already in your name then the size of guarantee you will be able to issue will be limited to whatever is your net worth and since some/much of that will be invested in giving the company the capital it requires to provide the deposit element of the property purchase you will struggle get finance for the company as your uncommitted funds will be limited

not impossible but will be difficult

it would be much easier not using a company until much later when you do indeed have a portfolio. Just take the income tax hit until then.

TheLookingGlass

Thank you for the advice.

Is the other possibility that I mentioned viable? The problem that I envisage is that the property (and liability) would be in my name, but the mortgage payments would come from a business account. Would a lender accept this?