Limited Company Buy to Let Mortgage
Find out whether a limited company buy to let mortgage is the right option for you. On this page we walk you through the benefits, how they differ from normal buy to let mortgages and the process you go through. You can also compare limited company buy to let mortgage rates with our best buys tool and find answers in our FAQs.
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Best Limited Company Buy to Let Mortgage Rates Comparison
Use our free best buy tool to compare the best buy to let mortgages for limited companies.
For the best buy to let mortgage rates on privately owned rental properties - i.e. those not owned through a limited company - see our other page.
The Financial Conduct Authority does not regulate some forms of buy to let mortgages.
These are indicative figures only and may not represent all the costs associated with each product. For more information speak to one of our LTD company buy to let mortgage brokers on 0330 433 2927.
What Is a LTD Company Buy to Let Mortgage?
A LTD company buy to let mortgage enable you to take out a mortgage through a limited company to purchase a rental property, rather than use your personal name. This means the LTD (limited) company will be on the BTL (buy to let) mortgage and listed as the owner of the property, which can help you keep your personal and business portfolios separate. LTD company BTL mortgages can also offer certain benefits depending on your situation.
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Why Purchase a Buy to Let Property as a Limited Company?
Taking out a mortgage and purchasing a buy to let mortgage through a LTD (limited) company or SPV (Special Purpose Vehicle) can be more tax-efficient than doing so in your personal name as a private landlord.
Here's why.
You Pay Income Tax on Rental Income from a Privately-Owned Rental Property
- To calculate how much tax on rental income you must pay, your rental income is added to your overall personal income which may push you into a new tax bracket and result in you paying Income Tax at a higher rate
You Pay Corporation Tax on the Rental Profits on Properties Held in a Limited Company, not Income Tax
- Corporation Tax is set at a main rate of 25% (2024 – 2025), which means that’s the rate you'll be charged if your limited company made over £250,000 in profit
- There's a small profits rate of 19%, which is the rate of Corporation Tax you'll pay if you made less than £50,000 in profit
- You may be entitled to Marginal Relief if your profits were between £50,000 and £250,000
- You can offset many expenses against the income for a company that you can’t with a privately-owned rental property
- Paying Corporation Tax instead of Income Tax on your rental income can be more tax-efficient for higher rate Income Tax payers
You can find more information on the other advantages of purchasing a buy to let through a limited company in our guide.
John Charcol Expert Tip - October 2024
"Limited company buy to let mortgages are an ideal solution for landlords looking to grow their property portfolio through a corporate structure. These mortgages offer potential tax advantages, particularly when it comes to income and inheritance tax planning. Whether you're an established investor or just starting out, purchasing property through a limited company can provide greater financial flexibility and protection. Navigating the complexities of limited company mortgages requires expert advice, and we're here to help you find the right mortgage that aligns with your investment strategy and long term goals."
How to Get a Mortgage Through a Limited Company
Speak to a Mortgage Broker
It's best to use a specialist buy to let mortgage broker like John Charcol to apply for a mortgage for buy to let through a limited company. Not only do we understand what criteria you need to meet for your mortgage, but most limited company buy to-let mortgage lenders won’t accept your application unless you use an intermediary.
Consult a Tax Adviser or Accountant
For help setting up a limited company for buy to let purchases, consult a tax adviser/accountant. They’ll be able to make sure everything is set up properly. You may want to approach a tax adviser/accountant before speaking to a mortgage adviser. That way, your limited company can be set up and you’ll be ready to start the buy to let mortgage application process when you first speak to your mortgage adviser. Nonetheless, if you want some more information before setting up your limited company, then give us call on 0330 433 2927 and we’ll answer your questions.
How Can John Charcol Help with Limited Company Mortgages?
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Getting a Buy to Let Mortgage for Limited Company Process
1. Meeting with Adviser and Mortgage Research
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.
2. Decision in Principle
Once you’re happy with their recommendation, you adviser will go about securing your DIP (Decision in Principle) - which is basically a promise from the lender that they’ll loan you money on the condition that the information you’ve provided is correct and subject to a valuation of the property.
3. Offer on Property/Refinancing
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.
4. Pre-Application and Submission
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.
5. Lender Underwriting and Valuation
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.
6. Mortgage Offer
If the lender is happy with everything they’ve found, they’ll send you a mortgage offer. They’ll also send us a copy.
7. Conveyancing
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.
8. Exchange and Completion
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.
LTD Company Mortgage FAQs
What’s the Difference Between a Limited Company, LTD and SPV Mortgage?
- 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
How Do I Set Up a Limited Company or Get an SPV for a Buy to Let Mortgage?
To take out a buy to let mortgage through a limited company, your limited company needs to have been set up with the purpose of buying/selling/managing property.
If you don’t already have a suitable limited company, you can set up an SPV. An SPV is a company you set up to buy/sell/manage property, specifically so that you can get a buy to let limited company mortgage.
It’s important you speak to an accountant as they can help make sure that your SPV is set up with certain SIC codes and definitions in mind.
See our guide for how to set up a limited company for buy to let purchases and for information about SIC codes.
Can a Limited Company Get a 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.
What Are the Criteria for a Limited Company Mortgage?
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
How Many Mortgages Can I Have Through a Limited Company?
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).
Are Buy to Let Mortgages for Limited Companies More Expensive?
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.
Do I Need a Portfolio Landlord Mortgage?
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.
Do I Need a Commercial Mortgage?
You’ll need a commercial mortgage deal if you want to diversify your portfolio and invest in semi-commercial and commercial units.
How Do You Choose the Right Commercial Buy to Let Mortgage for a Limited Company?
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.
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Struan
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Verified BuyerThe whole team at John Charcol have been amazing from start to finish! We first used the firm back in 2013 for our first property, fast forward 11 Years and we didn’t think twice about contacting them again to arrange a new mortgage. We were put in touch with Jade who was very knowledgable and gave us the best advice. She kept in touch throughout the whole process and was even chasing our solicitor at times to ensure things went smoothly. We won’t hesitate to use John Charcol again in the future. Thank you Maria & Dan
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Verified BuyerI am very thankful for David Putneys’ professional, responsive and honest assistance in securing the mortgage loan for our home in the UK. David was organized and thorough, as well as kind which made all of the difference when we faced a number of challenges to reach our goals. His dedication and commitment to servicing his client's requirements were exceptional. I will continue to recommend David Putney at John Charcol to family and friends that require mortgage assistance.
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Verified BuyerMy particular situation was quite unusual and complex - being retired and having a foreign income. Not only did John Charcol find me a mortgage, but a health insurance policy to cover the term at a very competitive price. I couldn't be more please with the service they have provided.
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Buy-to-Let Mortgage Calculator
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Buy-to-Let Rent Calculator
Not sure how much you need in rental income? Use our free buy-to-let rent calculator to work out how much you need in rent to qualify for a buy-to-let mortgage.
Rental Yield Calculator
Here you can use our free and easy calculator to work out the rental yield on your buy-to-let property. You’ll also find information on what a rental yield is and why it’s important.
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Mortgage Glossary
On this page you’ll find our detailed mortgage terminology glossary. There’s a lot of jargon out there but we’re here to make it easy.