SPV Mortgages

What are special purpose vehicle mortgages?

SPV mortgages are being increasingly used as a way to purchase property to rent out, and that is by setting up a limited company. This type of company is known as a ‘special purpose vehicle’ (SPV), which means it has been set up with the sole purpose of purchasing and managing property for its shareholders. SPV mortgages are popular with employed as well as self-employed landlords.

SPV mortgages' advantages

SPV mortgages are advantageous due to the tax relief that is available to SPV landlords. If you were to purchase a buy-to-let property in your own name, you would be charged personal income tax on your rental income instead of corporation tax. The corporate tax rate is just 19% as opposed to individual tax rates which can be up to 40%.

If you are a higher rate personal tax rate payer, with an SPV mortgage, there is the option to take 100% of your mortgage interest and associated expenses from the taxable income. Hence another great benefit of using an SPV limited company mortgage to purchase the property.

The buy-to-let market has been affected by the government’s recent tax relief restrictions so many landlords are looking to SPV limited company mortgages as a potentially more profitable method to purchase property.

Applying for an SPV mortgage when self- employed

Although you are already a self-employed business owner that does not stop you from starting an SPV limited company in order to manage property. The function and the pros and cons are the same whether you are self-employed or employed by a company.

Despite the property being purchased through a company, SPV mortgage lenders will focus on the directors of the limited company and will use their income for the SPV mortgage underwriting criteria. For self-employed applicants, lenders will normally require 3 years’ tax returns to prove income. If you do not have this, speak to Active as we know lenders that will accept less.

SPV mortgage experts

Traditionally quite a niche area of finance, there has been a recent increase in SPV lenders as they have increased in popularity. SPV mortgages are still not really provided by mainstream lenders so consulting a mortgage adviser is beneficial. As the market is becoming more competitive it means there are deals out there to be found if you know where to look.

A specialist SPV mortgage adviser can save you a huge amount of time searching for the best SPV mortgage deal. Active’s SPV team has experience in this market, have built relationships with the lenders and have access to broker only lenders: and we’ll process the application on your behalf. Booking a consultation is easy, simply click or call to…

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