Limited Company Mortgages

limited company

Learn how developer, Jack, navigated all the considerations of borrowing through a limited company with help from AALTO.

Jack was an employed developer earning around £40,000 per annum when he approached AALTO. He had a couple of buy-to-let properties in the background and had plans to increase the size of the portfolio by around five or six properties over the next three to four years.

Jack had previously spoken to an accountant, who had deemed that setting up a limited company “probably wasn’t worth it”. However, the customer wasn’t sure. Having also spoken to a number of brokers, he was told there were other advantages to buying with a limited company aside from the tax breaks alone.

With limited company mortgages, the difficulty often lies in the fact that accountants are not qualified to advise on mortgages and simply don’t have the years of experience or knowledge required. Similarly, mortgage brokers are not qualified to discuss tax and, again, don’t have the knowledge to do so.

This creates an infuriating situation where an accountant recommends one thing based on the tax position alone, but does not factor in the other benefits to buying through a limited company.

However, things were quite different when Jack spoke to AALTO. Around 70% of the cases we work on are buy-to-let mortgages, and half of those are typically limited company mortgages.

As a result, we have formed a very close working relationship with our accountant partner, Accounts Lab, and sharing the same offices means we can sit and chat through cases from both perspectives.

What this meant for our client is that we were able to understand the advice given by the accountant, and reference this against our own advice to ensure that Jack was aware of everything that would affect him. No frustration, and no one-sided advice.

In Jack’s case, the fact that he already had two buy-to-lets in his personal name meant that this revenue pushed him into a higher rate of tax. As such, the projected tax bills looked to be more expensive down the line than the extra initial cost of setting up a limited company.

Because we were able to estimate what the conditions would look like in the future from both a tax and finance perspective, Jack was able to make an informed decision. He planned to use the limited company to purchase any future properties, a decision he couldn’t have made without accountants and brokers who were in direct communication with one another.

At AALTO Mortgages, we take the time to understand our clients’ needs and go above and beyond to provide all the advice you may need, even if it’s outside of our remit, to allow customers to create effective property investment strategies.

If you would like to talk to us about limited company mortgages call 0207 183 1101 now.

 

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