Mortgage Works launches limited company product

The Mortgage Works (TMW) has announced plans to pilot a limited company buy-to-let mortgage product range for professional landlords. Nationwide’

The Mortgage Works (TMW) has announced plans to pilot a limited company buy-to-let mortgage product range for professional landlords.

Nationwide’s buy-to-let arm will trial five products through brokers Mortgage Intelligence and The Buy to Let Business, with plans for a wider roll-out if the pilot phase proves successful.

Rates start at 2.99 per cent for a two-year fix and 3.64 per cent for the five-year fixed rate product, both with a £1,995 fee.

A separate product will be made available for house of multiple occupation lending.

The key criteria for limited company lending will remain the same as for personal buy-to-let borrowing and will be available for purchase and remortgaging. 

Limited company buy-to-let lending has surged in popularity following the changes to mortgage interest tax relief that were announced by then-chancellor George Osborne in 2015 and introduced on 6 April this year.

The changes mean mortgage interest tax relief will gradually be cut back to 20 per cent between 2017 and 2020 – but those borrowing through limited companies will not be affected.

However, higher interest rates on mortgages available to limited companies have led to claims that unwary investors could see their income cut by £1,000 each year if they choose to incorporate.

It prompted fears among brokers that limited company borrowing could trigger another mis-advising scandal if clients rush into these deals.

Limited companies also face a range of additional costs associated with setting up and running the business, and they do not benefit from a capital gains tax allowance when selling properties.

TMW said applicants are encouraged to seek independent tax advice to assess its suitability before opting for a limited company mortgage.

Paul Wootton, managing director of TMW, said: “Having previously offered limited company products and with the long-term expertise to support professional landlords, TMW is now looking to return to this market. 

“By piloting a limited company buy to let mortgage through selected intermediary partners, we are aiming to respond to the potential demand in the market and further support those professional landlords for whom such products may be suitable. The targeted TMW limited company product range will offer competitive rates and a specialist underwriting team.
 
“Once we have analysed the response and quantified demand, we will assess if we can roll the range out more widely across our intermediary partners.”

Ying Tan, managing director of The Buy to Let Business, commented: “This is a defining moment in the limited company space where a major high street lender has decided to operate in this growing sector.  

“We welcome the increased competition amongst lenders which will hopefully mean improved criteria and attractive rates. TMW are not afraid to lead the way in the buy to let market and it is great to see them listening to the intermediary. Well done TMW!”

simon.allin@ft.com

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