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Financing via a Limited Company

Simon Allen, of Searchlight Finance, comments

In property there is a saying location, location, location. As a broker who has been involved in limited company finance for many years, on every call I get I feel like saying accountant, accountant, accountant.

Before you do anything, always talk to your tax adviser/accountant and as well as the tax treatment take into consideration the different costs between the two types of borrowing. Historically limited company finance is more expensive although the gap is reducing each year.

As well as the increased interest costs, setup fees tend to be percentage based rather than a fixed fee and you have increased costs at solicitors. A lot of landlords with properties in their personal name still tend to use self-assessment and don’t get an accountant involved, whereby for a limited company I would say you definitely need one.

It doesn’t matter if the limited company is 10 years old or 10 minutes old, the BTL lenders will base their decisions on the directors and shareholders. All the mortgage lenders will insist that directors become part of the application and sign personal guarantees which will then make them personally liable. Most of the lenders will insist that all shareholders also join in the application.

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