Reply to: BTL Mortgage advice

[Freelancer Financials]

Can anyone advise. I find myself in a tight conundrum. I recently bough a flat recently and due to problems with securing a mortgage I had to stump up an extra 5 % which I borrowed off my company. I also underestimated my tax for the year having forgot about corp tax. I'm new to the game!

My old flat has 32% LTV and I've had the same mortgage with Abbey for 9.5 years. Abbey refuse to let me take a penny out as I dont have two years company accounts, only one, and they don't do self cert. I have secured the council as tennants with garanteed rent for 3-10 years.

Every other BTL mortgage provider for contractors is trying to charge me 3% plus survey charge + 60% LTV + a high interest rate.

I need to realease equity to pay back my company and I'm running out of cash. I dont want o take more dividends from my company as my next years tax bill is already massive.

Any assitance on the most tax efficent way of doing this? Any other options availible

Thanks

Did you approach any specialist contractor mortgage brokers? Your situation is not mission impossible.

Let's see if I understand this correctly. You recently purchased a flat cash, 95% personal funds and 5% company funds. You have rented this flat out to the council for a minimum period of 3 years.

Your old flat that you still live in is mortgaged with Abbey with a current LTV of 32%. Abbey are refusing to give you a further loan advance because you have less than two years finalised accounts.

You have two options:

1. Remortgage you old flat

You can remortgage your old flat with a another lender that is more contractor friendly. Unless you have two years accounts Abbey normally doesn't want to know. But you can sometimes appeal to the underwriters.

The trouble with lenders is that they have a simplistic view of what qualifies as relevant earnings for lending purposes. Sadly Abbey is one of those. However, there are lenders that will look at your application with 1 years accounts. A good mortgage adviser can also get you a mortgage offer based on your contractor rates (up to 4-5 times annualised contract rate) and will not require 2 years accounts, like most conventional lenders.

2. Get a BTL mortgage on your new flat

I agree that BTL mortgages charge an interest rate which is considerably more than residential mortgage deals (around 4.5% to 6%). But you can get BTL let mortgages with arrangments fees of 1.5% or less. BM Solutions have same great rates right now. Bear in mind that most buy-to-let lenders want rent to cover 125% of the mortgage interest-only repayments.

If you still continue to have problems and need help, feel free to contact me.

Good luck.

John Yerou

[tim123]

write your sob story at www.toosmarttofailatBTLuk.com

you made that up

tim

[singhr]

doh! it was you? what a fool I've been - you actually had me going there

[sasguru]

And that folks, is a lesson in how to create a sockie.

HTH

[blacjac]

You are paying corporation tax?!? my you are new to the game. Check out the forums on this site, there are loads of ways around it.

[singhr]

You are paying corporation tax?!? my you are new to the game. Check out the forums on this site, there are loads of ways around it.

[ThomasSoerensen]

cant you grant yourself an extra salary so the corp porfit i 0. then there is no corp tax payable.

[mcgrco]

I cant sort issue out by continuing to work and not take any money out of the company.

I guess the question are there any other options or BTL agents I should look too.

[ThomasSoerensen]

write your sob story at www.toosmarttofailatBTLuk.com

[JoJoGabor]

Your choices are very limited. I think your only choice is to borrow the money to pay your CT bill. THis is likely to be a personal loan, but the APR will be high at the moment. ALso dont tell them its to pay your CT bill as they will see you as a risk, tell them its for repairs to your flat or something.

ANd don't ever mix up business and personal money for whatever reason, not even a directors loan

[FiveTimes]

borrow money from zopa/bank family ?

[Clippy]

My accountant is no use and I dont want to sell the flat.

Your fooked.

HTH.

[mcgrco]

My accountant is no use and I dont want to sell the flat.

[DS23]

sell the flat.

[DimPrawn]

Talk to your accountant.