Can Another Company Lend the Deposit to Your Property SPV?
October 22, 2026
A trading company or associated business may be able to lend money to a property SPV for a buy-to-let deposit. Some mortgage lenders accept that funding route under specific conditions. The money is a loan between two legal companies, with a repayment obligation that must be understood and recorded.
Do not treat “we own both companies” as a complete explanation. The mortgage lender, accountant and solicitor need to know where the money came from, which company owns it, the loan terms and whether the property can meet all its obligations.
How is an intercompany loan different from a director’s loan?
A director’s loan can involve an individual lending money to their company. An intercompany loan has one company as creditor and another as debtor. The same person may control both, but the companies’ accounts and bank balances remain separate.
If an operating business lends £50,000 to a property SPV, the operating company normally records a loan asset and the SPV records a liability. It is not automatically a dividend to the individual, share capital in the SPV or a gift.
The director’s-loan guide covers the individual-to-company distinction. Ask the accountant to identify the actual proposed transaction before money moves, especially where several shareholders or companies are involved.
Lender acceptance is not universal
Checked on 19 October 2026, Landbay’s intercompany-loan guidance requires a qualifying connection between the companies, a UK-incorporated lending company with at least twelve months’ active trading, supporting statements and other conditions. Its published policy requires the intercompany loan to carry no interest and not outlast the mortgage term.
InterBay’s lending criteria describe a different interest requirement and require monthly payments to be considered in rental coverage. That illustrates why there is no universal loan template that suits every lender.
Have the accountant and solicitor consider the terms the selected lender actually accepts. A lender’s interest requirement does not itself answer every company-law or tax question. Resolve any mismatch before committing to a purchase rather than changing the documents informally afterwards.
A 25% deposit can still be borrowed money
Suppose an SPV buys a £200,000 property using a £150,000 mortgage and a £50,000 intercompany loan. The mortgage LTV is 75%, but the SPV has borrowed the whole purchase price when both liabilities are included.
| Item | Amount |
|---|---|
| Property price | £200,000 |
| Mortgage borrowing | £150,000 |
| Intercompany deposit loan | £50,000 |
| Total SPV purchase debt | £200,000 |
| Mortgage LTV | 75% |
| Total purchase debt divided by price | 100% |
This is not the same as saying a lender has offered a 100% mortgage. It means the deposit creates a second liability. At the wider common-owner level, money has moved from one company, but the SPV’s own obligations still need to be assessed.
Use the deal calculator for the property, then add the intercompany payments and liability to the cash plan. Do not present a borrowed deposit as unencumbered equity.
Check the effect on monthly cash flow
Assume £1,100 rent, £150,000 interest-only mortgage debt at an illustrative 5.5% and £300 of other monthly cost allowances. Mortgage interest is £687.50, leaving £112.50 before tax, exceptional work and intercompany payments.
If the agreed intercompany principal repayment is £200 a month with no interest in this example, the immediate cash position becomes minus £87.50. Principal repayment reduces debt rather than being an operating expense, but the cash still leaves the SPV.
The lender may treat the intercompany obligation differently in its own rental calculation. That does not remove the need for your separate cash budget. Distinguish accounting profit, lender affordability and the actual bank balance.
Rolled-up interest is not a disappearing cost
Some arrangements accrue interest rather than paying it monthly, if permitted by the lender and appropriately agreed. That can help immediate cash flow, but it increases the amount the SPV eventually owes.
For illustration, £50,000 accruing simple interest at 4% for five years adds £10,000, giving £60,000 to repay. If interest compounds, the result differs. This example is not an interest-rate recommendation or a statement of any lender’s required terms.
Ask how the loan ends: repayment from saved rent, a property sale, a refinance or another documented source. If refinancing is the plan, test value, rent cover and the future lender’s accepted loan purpose rather than assuming all accrued debt can be extracted later.
Protect the lending company’s cash needs
Money available in a trading company today may be needed for tax, wages, stock, insurance or a downturn tomorrow. Ask the accountant to distinguish genuinely available funds from a temporarily high balance with unpaid obligations behind it.
Model the lending company after the advance as well as the property SPV after receipt. An investment that leaves the operating business unable to meet a predictable tax bill has not created a sensible group cash position.
Agree what happens if the lending company needs repayment earlier than expected. A demand loan can create different liquidity exposure from a defined long-term arrangement. The mortgage lender may also restrict repayment or require its security position to be protected.
Document the loan before transfer
The agreement should identify the correct companies and registration numbers, amount, purpose, term, interest where applicable, payment schedule and relevant restrictions. Ask the solicitor which approvals and documents the actual ownership structure requires.
Check whether the mortgage lender requires a declaration, postponement or other document affecting the intercompany creditor’s rights. A general loan agreement signed by both directors may not cover the mortgage lender’s requirements.
Keep board decisions, the signed agreement and the transfer evidence together. Record the transaction consistently in both sets of accounts. Avoid calling it a gift in the mortgage application while recording a repayable loan in the company books.
Keep the source-of-funds trail clear
The lending company should be able to evidence where the cash came from and that it was available. Statements, accounts and explanations of unusual transactions may be required. A final transfer from a UK bank account does not by itself establish the original source.
Read the property source-of-funds guide before moving money through several accounts. Direct, well-documented transfers are easier to explain than unnecessary steps through personal accounts.
If the money originated overseas or another entity owns the lending company, tell the broker early. Country, ownership and layering restrictions can rule out a product that otherwise accepts intercompany loans.
Consider different owners and a company exit
If the two companies do not have identical owners, document whose money is exposed and who benefits from the property. A person with a minority interest in the lending business may reasonably need different protections from the individual controlling both transactions. Ask the solicitor about authority, conflicts and the required approvals.
Also consider a later sale of the trading business. A purchaser may not want its cash tied up in a long-term loan to the former owner’s property company. The intercompany receivable can become an important negotiation item even if the rental itself is performing.
Review whether the agreement permits early repayment and how it interacts with the mortgage. Keep the exit consistent with the lender’s required terms. It is easier to discuss these scenarios before the deposit is advanced than after one company’s ownership has changed and the other cannot repay.
Do not turn this into an automatic tax-saving claim
The comparison with extracting money personally depends on the companies, ownership, tax position, future repayment and how returns will be used. There can be company and personal tax consequences at different stages.
Ask the accountant to compare the complete routes rather than only the tax avoided at the first transfer. Mortgage acceptance, company-law authority and tax treatment are different checks, all of which need to support the same arrangement.
The existing-company purchase guide helps frame the broader structure choice. An intercompany loan is one possible funding method, not evidence that every business should move spare cash into property.
Questions about intercompany deposit loans
Can my trading company lend a deposit to my property SPV?
Some mortgage lenders accept it under specific company, evidence and loan-term conditions. Confirm the proposed structure with the broker, accountant and solicitor before transferring funds.
Is an intercompany loan the same as a director’s loan?
No. The creditor is another company rather than the individual director. The companies’ accounts, agreement and payment trail need to show the actual transaction consistently.
Must the intercompany loan charge interest?
There is no single mortgage-market rule. Published lender requirements differ. Agree terms that satisfy the chosen lender and obtain the appropriate company and tax advice rather than copying another lender’s template.
Does a borrowed deposit mean the SPV has only 75% debt?
No. A 75% mortgage plus a loan funding the remaining price creates more total debt than the mortgage LTV shows. Record both liabilities and their payment requirements.
Can the lending company demand its money back whenever it wants?
The agreement and any mortgage-lender restrictions determine the rights. Model the consequences of repayment and do not assume a property refinance will be available whenever the operating business needs cash.
Is the arrangement automatically tax-free?
No. The complete company and personal tax position needs assessment, including interest, ownership, future repayments and withdrawals. A mortgage lender accepting the deposit source does not provide a tax ruling.