Can I get a mortgage with an LLP?

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Can I get a mortgage with an LLP?

Can I get a mortgage with an LLP?

Kathryn talks to us about getting a mortgage with an LLP.

Podcast approved by The Openwork Partnership on 5/7/2024

What is a limited liability partnership? Can you get a mortgage with an LLP?

An LLP is basically a type of limited company. It’s a self-employed business with directors. The difference between an LLP and a normal limited company, without going into too much detail, is about how the company is made up and the directors’ responsibilities. You can get a mortgage in an LLP and as a director of an LLP.

There are three different ways to set up a business – as a sole trader, which is typically one-man bands; as a limited company, which is probably the most popular, and as a Limited Liability Partnership.

Each individual type can get a mortgage in a very similar way. It’s just how the companies are set up that’s different.

Can a newly established LLP apply for a mortgage? Can I get a mortgage if I’ve only been in an LLP for a year?

Standard self-employed criteria would apply. You would still have to prove your income, whether you’re applying as a director or in the name of the company.

The company would have to prove that there’s sufficient income within the business to fund the mortgage. If it was in the name of the director, they would have to prove their income with self-assessment. Generally we would need a minimum of 12 months’ trading.

Some lenders don’t set a minimum time for the LLP to have been established. But if it’s a new business that’s just been set up, having a history of doing a similar job in an employed role would help towards getting a mortgage.

How are LLP mortgage applications assessed by lenders and what documents are needed?

Lenders will consider the LLP’s financial health, the incomes it generates, the credit history on the LLP and also that of the directors. They may also ask for business plans. They will also look at the value and type of property that you’re looking to buy.

How is mortgage affordability worked out for an LLP?

If you’re looking to purchase within an LLP, you’re probably going to need a little bit more deposit than for a standard residential mortgage. That’s not set in stone. It would be based on a few different factors, including affordability.

Lenders will look at your proof of income, the type of property that you’re buying and, if it’s an investment property, the return that property will bring.

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Can an LLP with company debt apply for a mortgage if they have bad credit?

If you as a partner in a limited liability partnership have poor personal credit, it could make obtaining an LLP mortgage more challenging. Lenders often will consider the personal credit history of the LLP partners alongside the LLP’s own credit history and financial health when making the lending decision.

Can someone get a Buy to Let mortgage as an LLP?

Generally mortgages for LLPs are on commercial properties such as office buildings, retail space or investment properties. The lender and the specific circumstances would determine the type of property that you would be able to go for.

Generally on a Buy to Let mortgage, if you’re looking at buying in a company name it would have to be set up specifically to buy properties – that’s called an SPV or Special Purpose Vehicle.

I would definitely advise anybody looking into doing that to speak to their accountant for more information on the tax advantages of purchasing Buy to Let property in that way.

How does remortgaging work? Are there any differences for an LLP?

It is essentially the same as a purchase. Buying or remortgaging is the same process with the same documentation. The only difference would be that obviously you are replacing a mortgage that you’ve already got, rather than purchasing a property.

There are a few different ways to do it and things we can look at depending on the profile of the case. That will inform the documentation we will need and the best way to go forward.

Is there anything else that can influence my eligibility to obtain an LLP mortgage?

Because obviously an LLP is a business, and it’s got directors that are self-employed, that business would need to be showing a healthy bank account – as well as the directors themselves. The more history you have got and the more proof you can show, the stronger the case is going to be.

You’re going to have more hoops to jump through if you’ve got a new business that’s only been trading for a year. It can be more difficult for a new company than for a longstanding one.

Is there anything else we need to know about LLPs and how a mortgage broker can help?

Given the complexity of obtaining an LLP mortgage, I would definitely advise speaking to a mortgage specialist like ourselves. We can guide you through the process and help you understand your options.

If your LLP has only been trading for a year or less and you just want to look into your mortgage options, or explore SPVs or any of the things I’ve mentioned today, just get in touch. We can guide you through the process and help you understand the best way forward.



Approved by The Openwork Partnership on 5/7/2024

Can I get a mortgage with an LLP?

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