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Buy-to-Let Mortgage Tips for SPVs: How to Maximise Your Chances of Approval

Buy-to-Let Mortgage Tips for SPVs: How to Maximise Your Chances of Approval
Setting up a Special Purpose Vehicle (SPV) for property investment is a smart way to manage and grow your Buy-to-Let (BTL) portfolio. However, obtaining a BTL mortgage through an SPV requires careful planning and attention to lender requirements.

This guide shares essential tips for securing a BTL mortgage for your SPV, covering everything from selecting the right SIC codes to maintaining strong financial records.

What is an SPV?

An SPV (Special Purpose Vehicle) is a limited company established solely for property investment activities. Many lenders prefer SPVs over trading companies because they’re simpler to assess, lower risk, and focused exclusively on property-related income and expenses.

Why Lenders Prefer SPVs for Buy-to-Let Mortgages

  • Simplicity: SPVs have clean financials focused solely on property activities.
  • Lower Risk: No unrelated trading activities that could complicate the company’s financial stability.
  • Streamlined Applications: Easier for lenders to evaluate rental income, expenses, and profitability.
  • Tailored Mortgage Products: Many lenders offer exclusive mortgage products for SPVs.

    • Tips for Securing a Buy-to-Let Mortgage for Your SPV

    1. Choose the Correct SIC Codes

    Lenders assess your SPV’s activities through the Standard Industrial Classification (SIC) codes registered with Companies House. Selecting the correct SIC codes is critical for demonstrating that your SPV is focused on property investment.

    Recommended SIC Codes for SPVs:

    • 68100: Buying and selling of own real estate.
    • 68209: Other letting and operating of own or leased real estate.
    • 68201: Renting and operating of housing association real estate.
    • 68320: Management of real estate on a fee or contract basis.

    Tip: Avoid codes related to trading or non-property activities, as these can lead to mortgage rejections.

    2. Maintain a Clean Financial Structure

    Lenders prefer SPVs with simple, transparent financials focused solely on property-related income and expenses

    How to Keep Financials Clean:

    • Open a dedicated business bank account for the SPV.
    • Separate SPV finances from personal accounts.
    • Track all property income and expenses accurately.

    Tip: Hire a property-focused accountant to ensure compliance and clear records.

    3. Build a Strong Credit Profile

    Although SPVs don’t have a credit history when first set up, directors’ personal credit scores play a key role in mortgage approvals.

    Steps to Strengthen Creditworthiness:
  • Ensure directors have good personal credit scores.
  • Avoid missed payments on existing loans or credit cards.
  • Keep company accounts up to date and free of overdrafts or liabilities.
    • Tip: Some lenders may require directors to provide personal guarantees for SPV mortgages.

    4. Demonstrate Rental Income Potential

    Lenders assess whether the property can generate enough rental income to cover the mortgage payments. This is calculated using the Interest Coverage Ratio (ICR).

    Typical ICR Requirements:

    • 125% for basic rate taxpayers.
    • 145% for higher-rate taxpayers.

    Example:

    • Monthly Mortgage Payment: £500
    • Required Rental Income: £500 x 1.25 = £625 per month

    Tip: Work with an accountant to present accurate rental projections based on market rates.

    5. Choose Lenders That Specialise in SPV Mortgages

    Not all lenders offer mortgages to SPVs, so it’s important to research those that cater to limited companies.

    Popular SPV Mortgage Lenders Include:

    • Fleet Mortgages: Known for competitive rates and high LTV options for SPVs.
    • Hampshire Trust Bank (HTB): Offers tailored lending solutions for complex property portfolios.
    • LendInvest: Specialises in Buy-to-Let and bridging finance with flexible terms.
    • Landbay: Provides BTL mortgages with a focus on professional landlords and SPVs.
    • Kent Reliance: A popular choice for HMOs and multi-unit properties, with options tailored for SPVs.
    • Foundation Home Loans: Caters to SPVs with competitive rates and criteria for portfolio landlords.
    • Paragon Bank: Ideal for experienced landlords with larger property portfolios.
    • Precise Mortgages: Offers products specifically designed for limited companies.

    Tip: Use a mortgage broker with experience in SPV BTL mortgages to identify the best lender and product for your needs

    6. Plan Your Deposit and Loan-to-Value (LTV) Ratio

    Most lenders require a minimum deposit of 25% for SPV Buy-to-Let mortgages, with a maximum LTV of 75%.

    How to Improve Your LTV Terms:

    • Invest in properties with strong rental yields.
    • Provide additional security, such as savings or assets.
    • Show consistent profitability in your property portfolio.

    Tip: A larger deposit can secure better interest rates and improve approval chances.

    7. Work with a Specialist Accountant

    A property-focused accountant can ensure your SPV meets all lender requirements and maximises tax efficiency.

    Services Provided by Property Accountants:

    • Guidance on SIC code selection.
    • Filing accurate accounts with Companies House.
    • Ensuring compliance with HMRC regulations.

    Tip: A good accountant can also help you prepare financial forecasts and rental projections for mortgage applications.

    Conclusion

    Securing a Buy-to-Let mortgage for your SPV is a straightforward process when you understand lender expectations and prepare accordingly. From selecting the right SIC codes to demonstrating rental income potential, following these tips will maximise your chances of approval and help you grow your property portfolio efficiently.
    Ready to take the next step? Contact Auction Finance today to explore tailored Buy-to-Let mortgage options for your SPV.

    FAQs

    Q 1. Can I change my SIC code if it’s incorrect?

    Ans: Yes, you can update your SIC code by filing a confirmation statement with Companies House.

    Ans: No, only certain lenders specialise in SPV mortgages. Work with a broker to find suitable options.

    Ans: No, SPVs don’t need an extensive trading history, but directors’ personal credit scores and the property’s rental income are key factors.

    Ans: SPV mortgages may have slightly higher rates or fees, but the tax benefits often outweigh these costs.

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