BTL Incorporation – using a ‘Directors Loan’
Omega were approached by a client in the process of incorporating their personally held BTL properties, having taken advice from their accountant to do so. The transaction at full market value structured to include Directors Loans within the newly formed limited company, the Directors Loans forming the gifted deposit.
The principal problem faced related to the clients’ intention to repay these outstanding Directors Loans through surplus rental generated over and above the Lender repayments and ongoing management costs. However, the Lender security package included a Deed of Subordination ultimately precluding the client from being able to repay this loan or draw income through this route.
We were able to provide the client with terms from a lender which matched that already being progressed but without the security restriction imposed, allowing our client the ability to incorporate their portfolio and benefit from repayment of the Directors Loans created through profits generated over time.
Residential Investment Market Updates:
- Lender launches product for client up to maximum age 95
- ‘Top slicing’ from personal income now available for full borrowed amount
- New First Time Landlord Product launched
Mixed Use Investment Property
Client had progressed a deal to valuation stage with an alternative lender directly, on discussing the case with the Broker team to obtain free advice on terms available across the market (to effectively provide peace of mind), they were advise the deal wasn’t going to meet the lender criteria based on percentage split and makeup of Commercial vs. Residential within the Mixed Use asset. The Property in question effectively 50/50 on a valuation basis, falling outside of the subject lender criteria.
Through simply calling for free advice, we saved that client over £1,000 in wasted valuation costs and time, and were able to progress the deal on their behalf with a lender able to support the transaction and property type.