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NLA Mortgages - landlords are considering their options

Article Posted - 18th February 2020

Tax Relief

As the end of the financial year approaches, buy-to-let investors will be mindful that mortgage interest tax relief will be phased out completely in April.

The effects of this tax change have been implemented in stages over the last three years, giving landlords the chance to plan and adapt to its financial consequences.

The significant rise in limited company buy-to-let mortgages is a clear indicator that many landlords are considering the tax advantages of using a corporate structure for their property investment businesses. Around 35 per cent of our applications are currently for limited companies and we are frequently asked by landlords whether or not it is a good option for them.

This is not a question we can readily answer as the financial implications of using a limited company will vary depending on individual circumstances and portfolio size. We always recommend seeking tax advice, but we can also provide information that could assist in the decision-making process.

For example, if a landlord client is seriously weighing up the benefits of setting up an SPV, providing mortgage illustrations for both personal name and limited company products could help calculate the overall cost savings involved.

Historically, limited company finance has tended to be more expensive than personal name finance although the gap is narrowing, and some lenders no longer distinguish between the two applicant types. In any case, it can be useful for landlords to be able to compare potential monthly repayments when deciding which route to take. Our online mortgage finder has a simple built-in filter for limited company products enabling visitors to obtain comparable mortgage illustrations without entering a complete fact find.

Remortgaging

It is difficult to predict what effect the current political and economic climate will have on interest rates in 2020 as Mark Carney prepares for his departure from the Bank of England and Andrew Bailey gets ready to step in.

It has also been predicted by industry pundits that the buy-to-let remortgage market will slow in 2020 as more landlords are choosing 5-year fixed rates which lengthens the remortgage cycle. However, mortgage rates are still very low and now could be a good time for landlords to examine their whole portfolio to make the most of these deals.

If landlords start to feel more confident about the UK economy in the coming months and are considering expanding their portfolios, releasing equity from existing properties is a popular way of providing a deposit for a new property purchase. There are plenty of options to choose from for all property types and situations, including many that come with incentives such as a free valuation and free legal fees.

For clients looking for a like-for-like remortgage, switching lender is not the only way to secure a lower rate. There is now a growing number of lenders who offer retention products to existing customers which can provide a quick and easy way to refinance.

How NLA Mortgages can help

NLA Mortgages provides a free online buy-to-let mortgage search facility for all private landlords enabling you to source from a highly competitive range of buy-to-let mortgage schemes that are researched and updated daily.

Visit www.nlamortgages.co.uk to view our wide range of limited company products.

You will often have access to schemes that are not available in the general marketplace and all can be viewed directly from the NLA website.

If you would like to discuss limited company buy-to-let, please contact the NLA Mortgages support team on 029 2069 5555.

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The NLA is the UK's leading association providing support for private residential landlords, serving over 40,000 members nationwide. New landlords join the NLA for advice, information and guidance and to keep up-to-date with fast changing laws and regulations.

Join today and receive instant access to a wide range of key landlord services, award-winning resources and exclusive supplier discounts.

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