Buying a Portfolio Company queries

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Buying a limited company with a BTL portfolio is different from getting a standard BTL mortgage. Here’s a breakdown of your questions and some initial guidance:

Deposit for buying a company with BTL portfolio:

  • Traditional lenders won’t offer mortgages for company acquisitions. Instead, you’ll need to explore specialist lenders offering commercial loans. These loans typically require a higher deposit than residential mortgages, ranging from 30% to 50% depending on the lender and the risk profile of the company.

Loan against the company vs. individual properties:

  • Your approach of securing a loan against the company itself is a good strategy considering the following:
    • Recent property purchases: Many lenders avoid financing recently acquired properties (within 6 months) due to valuation uncertainties.
    • Lower value properties: Some lenders have minimum property value thresholds (often £50k) for BTL mortgages.
    • Existing tenants: The loan approval process for tenanted properties can be complex.

Exploring Loan Options:

  • Look into commercial lenders specializing in asset-backed lending (ABL). ABL loans use the company’s assets (the BTL properties) as collateral for the loan.
  • Mezzanine financing might also be an option. This combines debt and equity financing, potentially reducing the upfront cash requirement but involving some ownership dilution.

Considerations:

  • Due diligence: Crucially, conduct thorough due diligence on the company’s financials, property portfolio health (tenancy agreements, rental yields, maintenance records), and any legal issues.
  • Tax implications: Consult a tax advisor to understand the tax implications of buying a limited company with a BTL portfolio.
  • Specialist advice: Consider seeking advice from a corporate finance broker specializing in acquisitions within the BTL sector. They can guide you through the process, identify suitable lenders, and negotiate loan terms.Disclaimer: This is general information, and I cannot provide specific financial advice. It’s important to consult with qualified professionals like a corporate finance broker, accountant, and solicitor before proceeding with such a purchase.

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