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Building a portfolio within an SPV – how we can help

26 Apr 2023

As a lender, over the past 12 to 18 months, we have taken steps to transform our underwriting approach by putting new systems and processes in place which enable us to say yes to more cases as opposed to a “computer says no approach”.

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Now this doesn’t mean that we have significantly shifted our lending position, we have simply removed some prohibitive barriers and armed our highly qualified and vastly experienced underwriting team with greater autonomy. All whilst maintaining robust and responsible lending boundaries.

We recently asked the underwriting team to outline one simple component within our BTL criteria which has helped them to deliver more positive outcomes.

The most common response was our approach to limited company deposits, more specifically for those clients building a BTL portfolio to sit within a Special Purpose Vehicle (SPV). Many deposit options are available for such a transaction. Landlords can opt to use their own personal funds and pay them into the SPV via a director’s loan, use shareholder funds or a combination of both.

They may also wish to use funds from another company they are party to. This could be via a company loan in common ownership whereby the funds are paid directly to the SPV or if the SPV has a parent company. This would be classed as an intercompany loan whereby the funds are transferred within that group of companies.

Our approach allows us to condition an offer depending on how these funds are being generated and to alert the solicitors accordingly. The solicitors should then know exactly how to treat each scenario thanks to the Mortgage Lenders Handbook for conveyancers which details our legal requirements for them.

This is just one example of a joined-up criteria and a manual underwriting approach. And with the volume of limited company business being written expected to continue its sharp upward growth trajectory, it will be more important than ever for intermediaries to work with specialist lenders whose underwriting team have the ability and appetite to say yes in 2023 and beyond.

*This article was originally published on BTL Insider

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