Yes, if there is enough equity in the property or you have a deposit saved up seperately
Why should I keep my existing property?
You are chain free therefore more attractive to sellers
You have retained the property as a long term investment
- Do you already have a deposit saved up?
- Yes
- Obtain Consent-to-Let from Existing Lender
- Check that the lender for the future residential purchase will not require evidence of rental income – we can recommend lenders who match this requirement
- Obtain Consent-to-Let from Existing Lender
- No
- Is your current mortgage more than 80% of the value of your home?
- Yes
- You will most likely need to sell your current property in order to move home
- No
- You can raise additional funds up to 80% of the value of the property with a buy-to-let mortgage
- Yes
- Is your current mortgage more than 80% of the value of your home?
- Yes
My current mortgage is less than 80% of the value of my home so I want to convert it to a buy-to-let mortgage.
Rental coverage
Buy-to-let properties have to meet lenders’ rental coverage criteria.
To find out how much you can borrow please give us a call with the following information:
- Property value
- Existing balance
- Expected rental income
Should I own it in my personal name or via a limited company?
- Do you plan to keep your current property for less than 3 years?
- Yes, this is to move home without having to wait for a buyer/chain-free
- Selling your existing property within 3 years you will be refunded the extra 3% stamp duty payable on the future purchase
- Better to proceed with personal name ownership
- Selling your existing property within 3 years you will be refunded the extra 3% stamp duty payable on the future purchase
- No, I want to keep the property longterm
- Basic Rate Taxpayer?
- Lean towards BTL in personal name
- Higher/Additional Rate Taxpayer?
- Lean towards BTL via a limited company
- Basic Rate Taxpayer?
- Yes, this is to move home without having to wait for a buyer/chain-free
Stamp duty
Personal name ownership
By retaining your existing property in your personal name, you will pay an additional 3% stamp duty on the future residential purchase…however if you sell your existing property within 3 years, you will be refunded the extra 3% stamp duty back
Limited company ownership
The company is purchasing the property from you with a buy-to-let mortgage.
All buy-to-let transactions are liable to an extra 3% stamp duty in England or 4% in Wales
However, the benefit is that you are no longer a home owner, therefore, you pay standard stamp duty rates on the more expensive future residential purchase.
Example
If your current property in England is worth £300,000 and you are purchasing a £650,000 property in England to live in, your limited company purchases the £300,000 property from you with a buy-to-let mortgage.
All buy-to-let transactions are subject to an extra 3% stamp duty; stamp duty of £14,000 for a £300,000 buy-to-let property.
You do not pay capital gains tax as selling your main residence and, as you are no longer a home owner; the company owns it, you pay standard stamp duty rates on the more expensive £650,000 onward purchase.
- Paying £22,500 stamp duty instead of £42,000.
- £22,500 stamp duty for residential purchase.
- £14,000 stamp duty for BTL.
- £36,500 total stamp duty.
- £42,000 – £36,500 = £5,500 saving on stamp duty.
You have saved £5500 in stamp duty, your property is in a limited company structure moving forward and lenders will accept the equity in the property as deposit.
They will consider the equity a director’s loan so you can repay yourself back tax free with profits without taking a dividend.
CONTACT US FOR THE CURRENT RATES AND A FREE CONSULTATION
Why Use Neil Soundy Financial Services For Your Mortgage Advice?
- We are experts in complex lending
- We are experts in SPV/Ltd Co lending
- Your initial consultation is free with no obligation
What Our Clients Say
What you see is what you get with Neil Soundy FS! Very professional, very experienced and always on time. Securing mortgages on 2 properties simultaneously using SPV was unbelievable and amazing. We would always recommend Jake, a man that knows his onions, very brilliant at his job!
F Babarinde
How Much Will It Cost Me For Your Advice?
A fee of £495 is payable on completion of the mortgage and Neil Soundy Financial Services Ltd will keep the commission received from the lender for arranging the mortgage.
Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.
The Financial Conduct Authority does not regulate some forms of buy-to-lets.
We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.
Think carefully before securing other debts against your home/property. Your home/property may be repossessed if you do not keep up repayments on your mortgage.
