This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Category: limited company
There is no limit to the number of buy to let mortgages a limited company, can have, but a given lender typically sets limits around their ‘exposure’, and this is done in a couple of ways.
‘Exposure’ describes the amount of lending of a particular type a lender is prepared to take on.
It is measured by the number of buy to let mortgages a limited company or individual has with the lender, or the number of properties in the same geographic area the lender has on their books, from any number of borrowers.
Why do lenders limit the mortgages they will offer?
As with everything lending related, it comes back to risk. If a large percentage of mortgages any one lender has in place are taken out by one company or individual, and that company or individual gets into financial difficulty, there is a larger risk of losses for the lender.
To quote an English phrase, the lender would be “putting all of their eggs in one basket” if they were over exposed with their lending. If the basket drops on the floor, and all the eggs are broken, there are no eggs left.
To take that analogy and apply it to lender exposure, if a lender has all their mortgages with one company/person and that person stops paying their mortgages, the lender could lose money. Similarly, if the lender has most of their mortgages on property in a similar postcode area and house prices in that area suddenly dropped, the lender as well as the mortgage borrower could lose money.
What if I reach the limit of exposure with a lender I am with?
If you have borrowed as much as you can with one lender, then you would have to turn to another lender to borrow from on your next investment.
Finding another lender, who can offer you competitive mortgage interest rates, is a big job. Whilst buy to let mortgages are a sub-set of the overall mortgage market, there are still over 80 lenders with hundreds of products on offer.
Working with a broker can completely streamline the process of finding a suitable lender. What’s more, given a lender often charges to value your property as one of the first parts of the underwriting process, a broker could save you money. Your broker will use their knowledge and professional sourcing technology to find a lender that meets your needs and circumstances.
This work by a broker aims to ensure to your application is successful.
Use our broker service to strengthen and expand your portfolio
If you are investing in significant numbers of properties, it can be difficult monitoring them all for effective yields. We offer a free portfolio review service, and you can use our portfolio template to gather all your property details together, if you haven’t already.
Call free on the number above, live chat with advisors on our website or enquire online for a call back today.
