Property investors should be aware of the small print when dealing with mortgage lenders and especially those investors that have decided to go down the limited company route.
We are finding that the lenders are being incredibly picky about the criteria. I wonder if this is because this is all very shiny and new and the lenders are checking and double checking to make sure that everything is in order. I fear that this is however going to be the new landscape and criteria is going to be followed to the letter.
The lender in question is The Mortgage Works - the go to for many BTL investors and we have recently had some difficulties with them on what is know as SIC codes. This 4 digit code could make or break your application! The SIC code identifies what your company can and cannot do and it is vital to ensure that when you apply for a mortgage that you have a SIC code that reflects only that the company is going to be trading property. If there is anything else that has been added to the SIC code to allow the company to do something else like estate agency or tenant services then you can expect TMW and any other lender to bounce the application.
TMW are also keen to ensure that there is not a plethora of directors and shareholders in your company. They have a strict rule on having only two directors and only two shareholders. Again if you apply with more then they will simply bounce your application and you will need to get rid of some of the directors and or do a share transfer.
It's not all bad news though. TMW will allow your solicitor to act for them so none of that double solicitor nonsense which will just slow the transaction from snail's pace to reverse! They also do not want a "floater" - a floating charge on your moveable assets for uniniciated amongst you but they will want a noose around your neck by way of a Personal Guarantee.
By all accounts the amount of applications that has flooded into TMW is more than 6 times what they were expected and they therefore can afford to be as picky as they are.
As ever you need to make sure that the criteria is followed and that you have all your ducks lined up. If you want a chat about limited company BTLS then do get in touch.