Limited Company Buy-to-Let Mortgage

When you phone us, you can either arrange a phone appointment with your adviser or a face-to-face meeting – whatever suits you. Your adviser will ask you some questions and, once they have all the information they need, they’ll go away and find suitable mortgage deals for your circumstances and future needs. They’ll also arrange a follow up call to present you with what they’ve found. It may require more than one conversation to gather all the right information, depending on where you are in your property search.

After you’ve secured a DIP (Decision in Principle), you’ll be in a great position to make an offer on a property or move forward with refinancing and possibly changing ownership from private landlord to limited company.

Following the acceptance of your offer, we’ll send you some information which explains all the documents we need to submit to the lender. You’ll be assigned a client relationship manager who’ll check and submit certified copies of your documents; they’ll liaise with both you and the lender. Your adviser will then submit the fully packaged mortgage application.

The lender will underwrite your application; this basically means they’ll verify the information you’ve provided and review all your documents for themselves. They’ll also instruct a valuation for their purposes on the property.

If the lender is happy with everything they’ve found, they’ll send you a mortgage offer. They’ll also send us a copy.

After you’ve accepted your mortgage offer, you’ll go through the legal part of the process, known as conveyancing. This is where the solicitors/conveyancers draw up contracts and organise the actual, legal purchase of the property/refinancing. If buying, you’ll also need to arrange buildings insurance at this stage, making sure it’s in place from exchange.

Once everything is in place, your conveyancer/solicitor will exchange contracts with the seller’s conveyancer/solicitor. It’s at this point that you put down your deposit and are legally bound to buy the property. You’ll lose your deposit if you pull out after exchange. The purchase completes when money is transferred on an agreed-upon date. As soon as you have a date for completion you’ll know when the property can take tenants, therefore you can start speaking to a letting agent.

If it’s a remortgage buy-to-let process, then your conveyancer/solicitor will set a date to draw down the funds and pay off any existing lender(s) once the mortgage offer’s released.

• A limited company is a company that’s owned by private investors; it’s not on the stock exchange. These investors are legally responsible for the company’s debts, but only to extent of the amount they’ve invested
• An LTD company is the same as a limited company, therefore an LTD company buy-to-let mortgage is the same as a limited company buy-to-let mortgage. Some people simply prefer to use “LTD” instead of “limited”. It’s entirely an aesthetic choice
• An SPV (Special Purpose Vehicle) is a limited company which is set up specifically to manage properties. You set one up precisely for the purpose of taking out a limited/LTD company buy-to-let mortgage

You can take out a buy-to-let mortgage through a limited company. The buy-to-let property you purchase with the mortgage will be owned by the limited company. Many people choose to do this – rather than take out a buy-to-let mortgage and purchase a property as a private landlord – because it can be much more tax-efficient and better for Inheritance Tax purposes.

The criteria for limited company buy-to-let mortgages are fairly similar to the criteria for normal buy-to-let mortgages.

 There are a couple of things to bear in mind though:

• The limited company has to be set up/have been set up with the purpose of buying/selling/managing property
• The assessment criteria for limited company mortgages can vary from lender to lender
• The lender will often consider the personal financial history of the company director(s) and will usually require that the director(s) personally guarantees the debt
• There’s usually no minimum time that the company has to be incorporated for

You can have as many mortgages as your lender will allow. Some lenders will let you have up to 4 or 5 mortgages with them. You become a portfolio landlord when you own 4 or more rental properties, whether they’re owned privately or through a limited company.

Many lenders will also often have a limit on the total amount you can borrow with them and a total borrowing limit across all lenders.

If the overall figure you want to borrow becomes too high then you’re essentially running a commercial operation and should therefore take out a commercial mortgage(s).

Buy-to-let mortgage rates tend to be a little bit higher for limited companies than for private landlords. You can view current limited company mortgage rates using our best buy tool above.

You’ll need a portfolio mortgage if the overall figure you want to borrow across lenders is too high for a limited company buy-to-let mortgage. You may also want a portfolio mortgage if you have a large portfolio of 4 or more investment properties.

You’ll need a commercial mortgage deal if you want to diversify your portfolio and invest in semi-commercial and commercial units.

Choosing the right commercial buy-to-let mortgage will depend on several factors such as rate, relationship with the lender, timeframe for completion and more. Ultimately, it depends on your needs and finding the balance that suits you.

A mortgage broker like John Charcol will be able to learn about your needs and establish the best route and deal for your circumstances.

Limited company buy-to-let mortgage lenders don’t offer 100% mortgages. You’ll typically have to provide a mortgage deposit of at least 25%.

Mortgage deposit requirements for buy-to-let properties – including those owned through a limited company – tend to be higher than standard homeowner mortgages, as more risk is taken on by the lender.

No, both new and experienced landlords can apply for SPV mortgages as long as their company meets the lender’s requirements.

Personal mortgages are tied to individuals, whereas business buy-to-let mortgages (also known as limited company buy-to-let mortgages) are tied to a company structure, offering different tax and financing benefits.

Getting a buy-to-let mortgage through a limited company can be more straightforward than getting a buy-to-let mortgage in your personal name in some situations. Many lenders are increasingly comfortable with limited company structures – especially SPVs – because they’re set up solely for property investment and involve less complexity than trading businesses.

However, the application requirements are typically more detailed. Lenders will usually ask for:

• Personal guarantees from directors
• Evidence that the company is set up with the correct SIC codes
• Rental income projections that meet their affordability criteria

While approval isn’t harder, limited company mortgages do involve additional steps compared to applying as an individual. For landlords planning to grow their portfolio, the structure can sometimes make long-term lending more accessible, even if the initial process feels slightly more involved.