Can I use multiple lenders in my limited company when building my property portfolio?
The simple answer is yes you can!
There is nothing stopping you from doing so, IF, your existing lender does not hold a debenture against the company.
What is a debenture?
A debenture is a floating charge against company assets in favour of the lender. A debenture is an agreement between a lender and a borrower which is registered at Companies House. This agreement gives the lender security over the assets of the Company. A floating charge sits against all assets of the company, not just the property relating to the mortgage, which means the lender has security over any other assets you have within the company.
Some commercial lenders will request a debenture when a new mortgage is undertaken, but the majority of BTL lenders do not insist on this.
How do I find out if I have a debenture against my property company?
A quick search on companies house will confirm if a debenture is listed against your company.
Where a charge number states, ‘Fixed & Floating Charge’ under the ‘Brief Description’ section this is a debenture.
Step 1: Go to Companies house: https://www.gov.uk/government/organisations/companies-house
Step 2: Find Company Information, click ‘Start Now’, and enter your company name
Step 3: Your business page will have a menu showing ‘Overview’ ‘Filing History’, ‘People’, ‘Charges & More’
Step 4: Select ‘Charges’
Each property you own with a mortgage against it will be listed as a 1st charge. Any further charges will show here.
If a debenture is in place, you will need to obtain consent from the lender who holds it before you can undertake a new mortgage with a different lender.
This consent comes via a letter of non-crystallisation. The consent will separate any new property from the previous lender’s claim under the debenture.
Most lenders are happy to issue a non-crystallisation agreement, just keep in mind it can take time to put in place and it will incur a legal fee.
Help finding your new mortgage
If you are looking to purchase a new property within an existing company, where there are existing mortgages, speak to your broker.
The lender options available to you and the process to follow will vary depending on your personal situation. We would recommend seeking professional guidance and advice as early in the process as possible to avoid delays further down the line.
If you have any questions please contact our property finance team on firstname.lastname@example.org