Buy to Let Mortgages for Limited Companies

If you're thinking about investing in property, you've probably come across the term "limited company buy-to-let mortgage." It's a popular route many landlords are taking, especially in recent years. But what exactly does it mean? And is it the right option for you?

A limited company buy-to-let mortgage is a powerful tool for landlords who want to invest strategically. With the right setup and guidance, it can offer a range of benefits that make managing property investments more efficient and tax-savvy.

Before making a decision, talk to an expert, both a mortgage broker and a tax advisor, to ensure this route is the best fit for your personal and financial goals.

Looking for expert guidance on Limited Company Buy-to-Let Mortgages? Contact Infinite Finance London at 020 3813 7800 to schedule a free consultation.

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What Is a Limited Company Buy-to-Let Mortgage?

A limited company buy-to-let mortgage is a type of mortgage that allows landlords to buy rental property through a limited company, not in their personal name.

Instead of you being the legal owner, the company owns the property, and the mortgage is taken out in the company's name.

This arrangement can provide potential tax advantages and help maintain a separation between personal finances and the property business. It's a popular option for landlords aiming to expand their portfolio or manage multiple properties more effectively.

Can a Limited Company Get a Buy-to-Let Mortgage?

Yes, a limited company can absolutely get a buy-to-let mortgage. In fact, there are mortgages specially designed for this purpose, often referred to as limited company buy-to-let mortgages or SPV (Special Purpose Vehicle) mortgages. Instead of buying the property in your personal name, the limited company becomes the legal owner.

Why Would a Limited Company Get a Buy-to-Let Mortgage?

The main goal is simple: to purchase a property and rent it out to tenants, just like any other buy-to-let, but through a company structure. This setup is becoming increasingly popular with landlords and property investors looking to grow a portfolio in a more tax-efficient way.

Benefits of Using a Limited Company for Buy-to-Let

More and more landlords are choosing to buy rental properties through a limited company, and for good reason. While it may not be the right choice for everyone, using a company structure can offer several financial and practical advantages, especially if you're planning to grow a property portfolio.

Here are some of the key benefits of using a limited company for buy-to-let:

1. Potential Tax Savings

One of the main reasons landlords use a limited company is for tax efficiency. When you own a property personally, your rental income is taxed as personal income, which can mean higher tax bills if you're a higher-rate taxpayer.

With a limited company, profits are typically taxed at the corporation tax rate, which is often lower than the higher bands of income tax. This can result in significant savings, especially as your rental income grows.

2. Easier to Reinvest Profits

When your rental profits stay inside the limited company, you can reinvest them into buying more properties without withdrawing the money and paying personal tax on it. This makes it easier to build a portfolio over time.

3. More Control Over Tax Planning

With a company structure, you have more flexibility when it comes to how and when you take income, for example, through dividends or salaries. This allows you to manage your personal tax liabilities more efficiently, especially if you have other sources of income.

4. Personal Liability Protection

A limited company is a separate legal entity, which means your personal assets are usually protected if something goes wrong with the property or mortgage. This limited liability gives landlords extra peace of mind, particularly when taking on larger investments.

5. Better for Estate & Inheritance Planning

Transferring ownership of a company (via shares) is often easier and potentially more tax-efficient than transferring properties owned in your personal name. This can be a useful tool for estate planning, especially if you want to pass your business on to family members in the future.

6. Professional Image & Structure

Running your buy-to-let portfolio through a limited company can make you look more professional to lenders, accountants, and even tenants. It also helps you keep your personal and business finances separate, making things easier to manage.

Using a limited company for buy-to-let has many potential benefits, from lower tax bills to greater investment flexibility. However, it also comes with extra responsibilities and costs, such as company setup, accounting fees, and slightly different mortgage options.

If you're considering this route, it's a good idea to speak with both a specialist mortgage advisor and a tax professional to ensure it's the right fit for your goals.

How Does the Process Work?

Getting a buy-to-let mortgage through a limited company follows a similar process to a standard mortgage:

1. Set up your limited company, ideally with a relevant SIC code (like 68209 for property letting).
2. Research mortgage lenders who offer products for limited companies.
3. Submit your application through a mortgage broker or directly to the lender.
4. Provide the necessary documents, including company accounts, director details, and proof of income.
5. Have the property valued by the lender.
6. Mortgage underwriting and approval.
7. Completion and release of funds.

Working with a mortgage broker who specialises in limited company buy-to-let can make the process much smoother, especially if it's your first time doing it this way.

How Much Deposit Is Required for a Limited Company Buy-to-Let Mortgage?

For most limited company buy-to-let mortgages, you'll need a deposit of 20% to 25% of the property's value. However, the exact amount can vary depending on the lender, the type of property, and your company's financial situation.

Some lenders may require more, especially if you're new to property investing or if the property has a low Energy Performance Certificate (EPC) rating.

Standard Deposit: 20%–25%

This is the most common deposit range for limited company buy-to-let mortgages. You'll need to fund at least a fifth to a quarter of the property's value upfront.

Higher Deposit: 30% or More

In some situations, lenders may ask for a larger deposit, especially if:

• You're borrowing a higher percentage of the property's value (high LTV)
• The property has a lower Energy Performance Certificate (EPC) rating
• You or your limited company has a limited credit history or no previous landlord experience

Lower Deposit: As Low as 15%

Although less common, some lenders may accept a smaller deposit if the deal is especially strong, for example, if:

• The property is high-yield and in good condition
• You have a solid financial track record
• You're working with a lender that specialises in limited company lending

A higher deposit usually means better mortgage terms. That could include:

• Lower interest rates
• Reduced fees
• Greater choice of lenders

It can also make your application more appealing to lenders, especially if you're new to buy-to-let investing or applying through a newly formed SPV (Special Purpose Vehicle) company.

Deposit requirements for limited company buy-to-let mortgages aren't one-size-fits-all. Lenders look at a variety of factors, including your loan-to-value ratio, the property's condition and EPC rating, and your company's financial background.

To find the best deal and avoid overpaying, it's a good idea to speak to our specialist mortgage broker in London. We'll help match you with lenders who understand limited company buy-to-let and offer the most suitable options based on your circumstances.

How Much Can You Borrow Through a Limited Company?

Lenders usually offer between 65% to 80% Loan-to-Value (LTV) for limited company buy-to-let mortgages. The deposit is typically 20% to 25%, but it may vary depending on the lender, property type, and your company's credit profile.

Who Offers Limited Company Buy-to-Let Mortgages?

Many high street lenders and specialist mortgage providers now offer limited company BTL mortgages. Each lender has different criteria, so it helps to work with a buy-to-let mortgage broker who can find the most suitable deal based on:

• Your experience as a landlord
• Your deposit amount
• The type and location of the property
• Your company's structure and accounts

Is a Limited Company Buy-to-Let Right for You?

If you're serious about building a long-term property investment business, or you're a higher-rate taxpayer, a limited company buy-to-let mortgage could be a smart move. It's not a one-size-fits-all solution, but for many landlords, it can offer better tax planning, protection, and flexibility.

Should Landlords Use a Broker for Limited Company Buy-to-Let Mortgages?

Yes, using a mortgage broker can make the process of getting a limited company buy-to-let mortgage much easier, especially if you're new to property investing or dealing with complex financial situations. A broker understands lender criteria, helps find deals suited to your company structure, and saves you time and hassle.

Key Reasons to Use a Broker:

• Access to more deals: Some lenders only work with brokers.
• Expert guidance: They know which lenders accept limited companies and SPVs.
• Save time: They handle the paperwork and application process.
• Tailored advice: Brokers match you with lenders based on your goals and circumstances.
• Avoid mistakes: They help prevent costly errors that could delay or derail your application.

Using a broker isn't essential, but for many landlords, it's a smart move.

Need help with a Limited Company Buy-to-Let Mortgage?

If you need help with limited company buy-to-let mortgages, call our expert mortgage broker in Wembley on 020 3813 7800 for a free consultation.

Our team of specialist mortgage brokers offers tailored advice, access to exclusive deals, and hands-on support throughout the process.