Limited Company Buy-To-Let Mortgages

Getting the most out of your property investment is vital, which is where a limited company buy-to-let mortgage can help.

If you are new to limited company buy-to-let mortgages, our guide will cover all the basics and more. Call us for free impartial advice.

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    Limited Company Buy-To-Let Mortgages From The UK’s Leading Lenders

    Paragon Bank Logo
    Lend Invest Logo
    Precise Mortgages Logo
    Landbay Mortgages Logo
    Shawbrook Bank Logo
    Aldermore Bank Logo
    Paragon Bank Logo
    Lend Invest Logo
    Precise Mortgages Logo
    Landbay Mortgages Logo
    Shawbrook Bank Logo
    Aldermore Bank Logo

    and many more…

    Market Update (as of 25/05/2024)

    Current Bank Of England Rate

    5.25%

    Current Ltd Company Rates:

    Starting from 3.14%

    First Published: 04th May 2023

    Last Updated: 05th June 2024

    Read Time

    Read Time – Approximately 8 Minutes

    Our Limited Company BTL guide should be helpful, but it’s always best to speak with an adviser to discuss your own personal circumstances and to get the best advice. Call us on 01604 212879 should you have any questions.

    What is a limited company buy-to-let mortgage?

    It’s a buy-to-let mortgage where the borrower is a limited company rather than an individual. Although the borrower is a limited company, the mortgage lender will require a personal guarantee from the owners (shareholders) of the company.

    Limited company buy-to-let mortgages are typically financed by specialist lenders, with little appetite from main stream buy to let lenders.

    Why would you use a limited company to purchase a buy-to-let property?

    Buying a property in a limited company can offer tax advantages compared to purchasing as an individual. Many landlords also do so for succession planning purposes (for example, passing onto children).

    Under a limited company, landlords are able to offset certain costs and expenses that they would be unable to as an individual, such as mortgage interest costs and lender arrangement fees.

    In our experience, the most common reason for landlords using a limited company is to benefit from the tax advantages a limited company can offer.

    Do I need to be an existing business owner?

    No, limited company buy-to-let mortgages are available to all applicant types, including first-time buyers, non-business owners, existing BTL landlords, and applicants with adverse credit and low income.

    In the vast majority of cases, our customers come to us having set up a new company with no trading history, which is actually the preferred company type for lenders, as there is less due diligence to be undertaken as part of the underwriting process. 

    Is the application process different for a limited company buy-to-let mortgage?

    The underwriting process is much like a standard buy-to-let mortgage, with some additional checks.

    The lender’s primary focus will still be on the company’s directors and owners, for example, through credit checks, employment and income checks, and background property checks. The lender will check the company’s structure and trading classification, and undertake director searches for other companies, searching for possible issues such as previously liquidated companies.

    Great Ltd Company Mortgages For BTL Investors

    With access to the whole market, including a strong range of specialist finance lenders you can be sure we’ll find a solution for your buy-to-let funding, with options for both SPV and Trading companies, including lending to partnerships and Trusts.

    Call us on 01604 212879 for a no obligation buy-to-let quote

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    SPV Limited Companies

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    Finance For All Types of BTL Property

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    Complex Company Structures

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    Inter-Company Loans Accepted

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    Large Portfolio Landlords

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    Borrow Up To 85% LTV

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    No Broker Fees!

    LIMITED COMPANY CRITERIA

    Classification of the limited company

    Most lenders that offer limited company mortgages will only lend where the limited company is a ‘special purpose vehicle’, or SPV for short.

    An SPV is a limited company with a specific Standard Industrial Code (SIC), showing that the company has been set up for the purpose of property investment and management.

    The SIC codes most commonly used are as follows:

    • 68100 – Buying and selling of own real estate
    • 68201 – Renting and operating of housing association real estate
    • 68209 – Other letting and operating of own or leased real estate
    • 68320 – Management of real estate on a fee or contract basis

    Non-SPV Limited Companies

    Options for Non-SPV limited companies, or as lenders refer to, a ‘trading business’ are a little more restrictive, but there are still a good number of lenders that can consider this type of company.

    A trading business would require a more extensive underwrite, as it could have been trading for many years and, for example, had multiple changes of ownership, and is therefore deemed a higher risk.

    We appreciate that some customers have SIC codes on their business that they haven’t necessarily used, but could deem the company as having trading activities outside of property. For example, we recently had a borrower whose company had SIC codes related to food and wholesale, which was then ruling out certain lenders who offered better rates. We asked the borrower to confirm these trading activities had never been undertaken and to remove the SIC codes from companies house. We were then able to obtain more preferential rates for the borrower.

    Buy To Let Mortgages For Layered Limited Companies

    A layered limited company is where another company owns the shares in a company rather than an individual, which could have multiple layers.

    There are options available for layered companies, subject to understanding the full structure, including off-shore companies.

    Number of Directors / Shareholders

    Some lenders have a maximum of 2 directors or shareholders, but most will allow up to 4. Directors and shareholders must typically be based in the UK, however there are options available for ex-pats and foreign nationals.

    Income Requirements

    Several lenders have a minimum income requirement, which ranges from £15,000 to £25,000, but many lenders now offer limited company buy-to-let mortgages with no minimum income requirement.

    Personal Guarantees

    Practically all lenders will now require the company’s owners (shareholders) to provide a personal guarantee (PG).

    A Personal Guarantee is a commitment from the directors/shareholders to repay the loan even if the company can’t. Lenders will require that the directors have Independent Legal Advice to confirm their understanding of the PG before completion can take place.

    ADVANTAGES OF LTD COMPANY MORTGAGES

    Tax advantages on rental income

    Rental income from property held in a limited company is taxed through Corporation tax, not income tax. The current rate for corporation tax is 19% for those with a profit of under £50,000 and 25% for companies with a profit of over £250,000.

    This could be particularly beneficial for higher and additional rate taxpayers.

    Offsetting Expenses

    As a limited company, you can offset the total amount of your mortgage interest against the rental income from the property, something private landlords are now unable to do.

    Limited companies also have a little more flexibility with regard to other items that can be offset as expenses.

    DISADVANTAGES FOR LIMITED COMPANIES

    Higher Interest Rates & Fees

    Interest rates for Ltd Company BTL mortgages will be higher than those of a standard BTL, as its a specialist type of lending.

    Fees with limited company mortgages also tend to be a percentage of the loan, compared to a flat fee you might see on standard BTL mortgages.

    No Capital Gains Tax Allowance (CGT)

    Limited Companies are not entitled to CGT. On the sale of an asset, a limited company will pay Corporation Tax on the full amount of the profit.

    As a limited company there will be certain requirements you’ll need to meet, which could incur more costs than owning as an individual, such as:

    • Preparation of accounts
    • Legal fees
    • Costs of incorporation

    DEPOSIT REQUIREMENTS FOR A LTD COMPANY BTL PURCHASE

    Minimum deposit requirement

    The minimum deposit for a ltd company btl mortgage is 15%, but options are restricted to a couple of lenders at best. Most lenders will require a minimum deposit of 25%, and best rates tend to start with a deposit of 40%, equating to 60% LTV.

    Sources of Deposit

    Deposit funds are typically required to come from the owner’s own funds.

    Inter-company loans can be acceptable, subject to understanding the structure of the company loaning the deposit. Typically, for an inter-company to be acceptable, the two companies should mirror one another in terms of ownership (same directors/shareholders)

    Call us on 01604 212879 to discuss your limited company BTL requirements

    WHICH MORTGAGE LENDERS LEND TO COMPANIES?

    We work with the following lenders:

    Aldermore Mortgage

    Barclays Bank

    Bath Building Society

    Buckinghamshire BS

    Castle Trust

    CHL Mortgages

    Fleet Mortgages

    Foundation Home Loans

    Hampshire Trust Bank

    Interbay

    Kensington

    Kent Reliance BS

    Keystone

    Landbay

    Leeds Building Society

    Lend Invest

    Molo

    MT Finance

    Lend Co

    MFS

    Nottingham BS

    Paragon Bank

    Pepper Money

    Precise Mortgages

    Quantum Mortgages

    Shawbrook Bank

    The Mortgage Lender

    The Mortgage Works

    Together Money

    United Trust Bank

    Vida Home Loans

    West One

    Zephyr Homeloans

    & More.

    Call Us

    Call us on 01604 212879 and speak to a limited company buy-to-let mortgage expert.

    Email Us

    If you would prefer to email and explain your situation in more detail, email us at:

    enquiry@adeptmortgages.co.uk

    Request a Call Back

    Use our call back form to request a call back and we’ll be in touch

    HOW IS INCOME CALCULATED FOR AFFORDABILITY?

    Limited Company Affordability

    Loan amounts are based on the rental income from the property, and subject to the type of product chosen (2 year or 5 year), and also what the actual product rate is.

    For standard buy-to-let properties, the rental income will need to cover 125% of the mortgage payments, with the mortgage payment calculated using either the rate selected, or a nominal rate if the product selected is for less than 5 years.

    To find out more about affordability for limited company buy-to-let mortgages we recommend you visit our guide to rental stress testing. You can also run your numbers using the calculator.

    GET MORE INFORMATION & COMPARE LTD COMPANY MORTGAGE RATES

    Interest Rates

    The interest rate you pay on a limited company BTL mortgage will be subject to several factors, including:

    • Loan to value
    • Product type required
    • The initial term of the product
    • Property type
    • Your credit profile
    Table showing limited company BTL rates

    View the Latest HMO Mortgage Rates

    View the Latest MUFB Mortgage Rates

    Get the best limited company mortgage deals

    Speak to a buy-to-let expert to find the best mortgage deal. We’ll never charge a fee for our services including submitting an application to a lender. 

    Call us – 01604 212879

    Save £100’s we’ll never charge a broker fee

      Get Started

      Speak To A BTL Mortgage Expert – Fee Free Whole Of Market Buy-To-Let Mortgage Advice

      Consent to contact (required)

      Frequently Asked Questions

      What type of property can I buy through a Limited Company?

      Limited company borrowing is open to all types of property. It is a common vehicle for purchasing many types of assets, including residential buy-to-lets, semi-commercial and commercial properties, and Land.

      You can also use a limited company to purchase a property with bridging finance or for development finance.

      Can I purchase multiple buy-to-let properties in the same Limited Company?

      Yes, you can, but there may be some restrictions depending on the lender.

      Some lenders have a maximum number of properties you can have mortgaged with them.

      It’s always best to speak to an adviser if you have multiple properties to finance.

      Can I get a limited company buy-to-let mortgage with a bad credit score?

      Yes, several lenders will lend to applicants with bad credit scores. It will depend on the severity of the bad credit, so it’s best to get an up-to-date copy of your credit report and then call us to discuss further.

      How many buy-to-let properties can I hold in a limited company?

      It depends on the lender. Some lenders allow you to own an unlimited number of properties within the company, while others limit you to a small number. 

      It’s best to discuss your requirements with an adviser.

      Find out more about bad credit buy to let mortgages

      Learn about HMO Mortgages with our HMO Mortgage Guide

      Thinking of Investing in Multi-Unit Blocks? Find out more about MUFB Mortgages

       

      Author: Darren Ferguson – Mortgage Specialist / Owner (CeMAP & CeRER)

      Darren is a highly experienced mortgage advisor working in the financial services sector for over 25 years, and holds the certificate in regulated mortgage advice and practice (CeMAP) and certificate in regulated equity release (CeRER).

      A small selection of some of our Limited Company Buy-To-Let lenders

      We source our mortgages from the UK’s leading lenders, including a range of specialist finance lenders.