Limited Company Buy to Let Mortgage

Limited Company Buy to Let mortgages are becoming more popular with landlords, particularly those with multiple properties or ambitions to have a portfolio one day. With this, more lenders are offering Ltd Co Buy to Let’s than ever before. See below some high level information about these mortgages and the requirements some lenders have.

What is a Limited Company Buy to Let Mortgage?

A limited company buy-to-let mortgage is a type of mortgage designed for individuals or groups purchasing rental properties through a limited company rather than in their personal names, usually this would be via a Special Purpose Vehicle (SPV).

How a LTD Co BTL Mortgage works

Obtaining a limited company buy-to-let mortgage involves setting up a company for property rental, finding a suitable property, and applying for a mortgage with a lender. The lender will assess your company’s financial health and will likely require personal guarantees from directors. All directors of the business will be underwritten in accordance with the lenders criteria and will be credit searched as a part of the process. Although most lenders will look at the directors personal income and outgoings, the mortgage affordability is usually based on the property’s value and expected rental income.

Benefits of Limited Company Buy-to-Let Mortgages

There are a number of benefits with a Limited Company mortgage, one if that it allows landlords to deduct mortgage interest as a business expense, potentially lowering taxable profits. Profits are subject to corporation tax, which is often lower than personal income tax rates. Additionally, using a limited company can provide better tax planning opportunities, such as distributing profits as dividends. This structure can also offer enhanced asset protection and make it easier to transfer ownership or sell shares in the company. It also supports scalability, making it simpler to expand your property portfolio efficiently.

Read our Buy-To-Let guide

Limited Company Buy to Let Mortgage Criteria

  • Company Structure: The applicant must have a registered limited company, often a Special Purpose Vehicle (SPV) incorporated specifically for property rental.
  • Director Requirements: Lenders usually require the directors and shareholders to provide personal guarantees and undergo credit checks, just like any other mortgage.
  • Financial Health: The financial health of the limited company is assessed, including profitability and the ability to manage debt. If there are debts against the business, such as other mortgages or charges the lender will need to be aware of these.
  • Deposit: The minimum deposit required for most lenders is 25% of the property value, although there may be some lenders who accept less (15% – 20%) subject to meeting their lending criteria.
  • Rental Income: The expected rental income from the property must usually cover 125% of the mortgage payments for Limited Company applications.
  • Experience: Some lenders prefer applicants with prior experience in property investment or management, but not all.
  • Property Type and Condition: The property must meet the lender’s criteria regarding type, location, and condition.
  • Credit History: Both the company and the directors credit history may be checked, as with any mortgage the better the credit history the better the chances are for approval.
  • Business Plan: A clear business plan may be required to demonstrate the viability of the property investment, particularly if there is an existing property portfolio against either the company or the directors.

Why Choose Connely Roberts Mortgage Services?

We are experts with over a decade of experience helping aspiring and experienced landlords with their Buy to Let mortgage requirements. We have access to a wide variety of different lenders, offering hundreds of different mortgage products, it’s our job to ensure you get the right mortgage suited to your needs and circumstances.

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Limited Company Buy to Let Mortgage FAQs

  • Does a buy-to-let company have to pay stamp duty?

Yes, the Limited Company is required to pay stamp duty. If any of the active directors currently own a property they will be subject to the additional 3% Stamp Duty surcharge. It’s also worth noting, first time purchases are not exempt from stamp duty, unlike when an individual buys their first property.

  • Does a limited company buy to let need a specialist mortgage lender?

Yes, you will need to find a mortgage from a lender that accepts property investment through limited companies. Not every lender in the market accepts Ltd company BTL’s.

  • How many mortgages can one limited company have?

There are no legal restrictions surrounding how many mortgages a LTD company can have, although some lenders may limit the amount of mortgages/total borrowing figure one company can have.

  • Is there a minimum amount of time the company needs to have been trading?

No, we can accept Limited Company applications from brand new companies. The company is required to have an active company bank account as the lender will need these details to set up the direct debit when the mortgage is live.

  • Are Limited Company Buy to Let mortgages more expensive than normal Buy to Lets?

Not necessarily, although it does tend to be more specialist lenders that accept Ltd Co BTL’s, therefore naturally their rates are higher than more mainstream lenders.

The Financial Conduct Authority does not regulate some forms of Buy to Lets. Your property may be repossessed if you do not keep up repayments on your mortgage. 

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances and will be agreed with you before proceeding, but we estimate it will be £495

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