Repayment of Director Loan

[NotBenny]

this may be in the wrong place, apologies if it is and mods please move if so.

My wife and I are looking at a buy to let, with the intention of borrowing against our house and buying a property outright without a mortgage against it (preferential loan rates for a home owner loan vs a buy to let mortgage). If we wanted to go down the limited company route, my expectation would be that we could loan the money to the limited company, with the company repaying the loan to us monthly from which we could pay the mortgage repayments. If this above board? Obviously it would take multiple years for the company to get enough income to repay the mortgage - there's plenty of information around for when a director owes the company money but I'm struggling to find relevant info to say whether a company can owe a director/directors money for multiple years in this way.

Obviously we'll consult an accountant before going ahead, and this is all speculative at the moment, but wondered if this was feasible before considering further.

[Eric Mc]

Why do you want to go down the limited company route?

If you personally borrowed money from a bank for a specific purpose i.e. to buy a property in your own name(s), you would not normally be allowed to pass that money to a limited company.

[red_slr]

Make sure you fully undestand the differences of all apsects of personal owenrship vs LTD. Esp if you needed to dispose of the property etc down the line.

I asked my accountant about LTD for AST and he told me only really worth it for 3 or more properties.

[SillyALFALove]

Personally I have BtL in my name and my main business and business property as ltd. I’ve yet to find a strong enough argument for putting BtL in ltd co.

My understanding has always been banks are not as keen to lend to ltd co landlords on a small scale and rates are not as competitive as available in ones own name.

You may well have investigated already but as always in these cases engage an accountant but yes the ltd co will be able to repay the directors loan to you in the way you describe.

Also be aware the costs of ltd co maintenance are higher than personal tax returns and will impact your margin on the BtL.

[IJWS15]

The lender will expect the property to be in the name of the borrower. You are not doing that.

The reason they don't like lending to small limited cos is that it is too easy to wind them up. To avoid being behind the tax man in the queue if that happens they will want a charge over the asset as a minimum. Guess who's paying for the adminstation costs of setting that up.

Also a "directors loan" is a loan from the company to a director so your thread title is a little misleading.

[Dixy]

And that is why you should not listen to people on forums who don't read the question and don't know the answer.