Using SPV to convert Mortgage to Buy to let

CaesandMarms

Hi,


I would be grateful for your advice on the use of SPV for property purchases.


My circumstances are that I am 34 and have a joint mortgage with my wife. We have c.120k in equity in our current property and around 50k in savings. We are both higher rate tax payers.


We would like to buy a bigger house for c.400k, whilst keeping our current property and renting it out. 2 reasons why I am hesitant to do this currently are - a) the stamp duty for a "2nd home would cost 3.5% more and b) any profit would be taxed at the higher rate.


I am therefore considering setting up an SPV to buy my current property which I then intend to rent out whilst using that equity to fund the larger property to live in.


Can those more au fait with this process answer the following


A) Do I have the correct process and does the use of SPV suit the purchase of current properties for the purposes of B2L?
Are mortgages readily available for SPV's with lets say 20% deposit?
C) What sort of Mortgage rates are available to SPV's - and is rental income 110%+ of the monthly mortgage payment a pre-requisite?


Any advice gratefully received

SDLT_Geek

Do bear in mind that your SPV will have to pay the higher rates of SDLT (that is, with the 3% surcharge) on the market value of the property it acquires. This is the case even though it is the only property it owns.

AnotherJoe

Have you done the sums to compare becoming a landlord with putting more money into your pension (very lucrative as a high rate taxpayers indeed almost criminal no to take big advantage of that ) plus having a smaller mortgage at a lower rate ?

phillw

SDLT_Geek wrote: »

Do bear in mind that your SPV will have to pay the higher rates of SDLT (that is, with the 3% surcharge) on the market value of the property it acquires. This is the case even though it is the only property it owns.

Yeah, it's much more suited to buying a new property than one you already own as you would be paying stamp duty anyway. It's rather irksome to pay stamp duty when you are just moving the house from your name to a company owned by you. But then you can sell the company and there won't be any stamp duty, although that only works for properties that are never going to be owner occupied.

dimbo61

Do the numbers add up !
Will you be able to Let out your current home for a good yield.
Do you know what is involved in being a Landlord ?
Can you afford a big new mortgage and the debt on the former home.
Many lenders want you to have 35/40% equity in a BTL property via a limited company and higher rates of interest.
Others have mentioned paying more into your pension. Putting a much bigger deposit down or taking an offset mortgage !!!!
Replacing your current home with a bigger place and only paying the normal stamp duty.
Build up savings in the offset account and buy a small BTL property while then only paying the extra stamp duty on a smaller property.
You might have a stunning property in a nice area but if only has one/two bedrooms it limits the yield you can get.
Buying a property as a BTL investment might mean a different type of property in a different area

Lucy_Hoad

From what I understand about SPV mortgages they are for portfolio landlords with larger groups of buy-to-let properties.

I have heard good things about Property Master for finding buy-to-let mortgages. You can apply online as well.

I have just had a look and they have a Limited Company page which you may find helpful?

Good luck.

amnblog

Lucy_Hoad wrote: »

From what I understand about SPV mortgages they are for portfolio landlords with larger groups of buy-to-let properties.

I have heard good things about Property Master for finding buy-to-let mortgages. You can apply online as well.

I have just had a look and they have a Limited Company page which you may find helpful?

Good luck.

That would be the same Firm you are doing 'Marketing' work for would it Lucy?