How To Get a Limited Company Buy to Let Mortgage

If you want to own property through your limited (Ltd) company, you may be wondering how to qualify for the best buy-to-let mortgage (BTL) on the market. Many companies could be declined this type of mortgage due to receiving bad advice, or not discussing their mortgage application with an expert beforehand.

The good news is that it’s quite possible to get a buy-to-let mortgage through your limited company, so long as you get the right advice tailored to your specific business needs. Luckily, the experts we work with are experienced in BTL loans.

Can I get a buy-to-let mortgage through my limited company?

Yes! Many inexperienced mortgage brokers turn away borrowers looking to ring-fence their investment properties in Ltd companies as it can be difficult to find lenders that accommodate such arrangements, but the good news is that it’s possible, especially if you enlist the help of the right mortgage broker.

The truth is, most high street lenders just don’t offer these types of mortgages and stick to competing for more straightforward mainstream business. Because of this, borrowers wanting a buy-to-let mortgage through a limited company could end up taking out a personal loan and, as a result, miss out on the benefits of this mortgage type.

For many investors with small or large portfolios, the tax benefits of buying property through a limited company can be significant, especially for higher or additional rate taxpayers.

Ltd company mortgages are also great for those that want to buy property as a collective rather than just two named individuals, and for those who wish to separate themselves from personal liability should things go wrong.

Did you know… An Online Mortgage Advisor broker has access to more deals than any comparison site. Get Started to unlock more options and increase your chance of mortgage approval.

Eligibility criteria

Buying property as a limited company is possible, depending on the buy-to-let company structure.

Many lenders will take the following criteria into consideration:

• An existing special purpose vehicle (SPV) Ltd company
• An existing trading Ltd company (Not an SPV)
• Starting up a new ltd company at the time of purchase
• Ltd companies with personal guarantees (PGs)
• Ltd companies without personal guarantees (PGs)
• Up to 85% loan to value (LTV)
• Rental income needs to be at least 125% of mortgage payment
• Minor adverse credit accepted

For tailored advice on criteria needed for a limited company buy-to-let mortgage, make an enquiry. We’ll then put you in touch with someone.

Existing limited companies

If you already own a Ltd company and are looking to either refinance or purchase a new property, getting a mortgage may be tricky.

Luckily, the advisors we work with have access to the whole market and regularly arrange buy to let through limited company mortgages for new and existing clients. If you want to be one of them, get in touch and a specialist will be happy to help.

Typically, most limited company buy-to-let mortgage lenders are only willing to approve companies that purely deal in property.

However, there are a small number of lenders who consider companies trading in other areas. They don’t usually accept businesses that trade as something else and want to buy property as well. These would usually be seen as commercial deals and would require specialist commercial buy to let mortgage.

Can an existing SPV limited company purchase a buy to let?

Companies that trade only in rental property are known as Special Purpose Vehicle (SPV) limited companies. They can be classified in different ways by lenders, according to the Standard Industry Classification (SIC) code that the company is registered at Companies House.

Typically these include:

• 68100: Buying and selling 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

Did you know… You only have access to one third of the Buy-To-Let mortgages available unless you use a specialist broker! Get Started with an OMA-Expert to unlock the entire market.

For those classed as SPVs, getting a BTL is now more straightforward than for firms trading as other SIC categories, and there are several options, depending on the situation.

Existing trading Ltd companies (not SPV)

There’s a small number of lenders who consider mainstream buy-to-let mortgages to Ltd companies that already run as a trading business. This business does not necessarily need to be trading in property either.

Typically, you need a 25% deposit for these mortgage types because the number of lenders available is restricted.

Setting up a new property company for buy to let

Newly registered limited company mortgages are also possible based on current criteria with a few select lenders. Basically, the Ltd company would need to be created at the time of application and would be best being registered with companies house as an SPV (see definition above).

Lenders will start lending at 85% loan-to-value and base affordability on the rental yield, with income needing to be at least 125% of the mortgage payment to be acceptable. However, some lenders may require more than this, for example up to 150% or even 180%, depending on the situation.

At least two (or one if in sole name) of the directors will need credit scoring to show that the company is creditworthy as it will have no history of its own. The lender will also need to verify the directors’ income to establish there is a level of underlying affordability.

If the directors have any adverse credit, it still may be possible to obtain the finance if other factors meet the lender’s criteria.  For more information on how to get an adverse credit mortgage, have a look through our in-depth guide.

NOTE: If you are a director of a limited company looking for a commercial mortgage to buy/remortgage a commercial property, read our guide on commercial finance.

Directors of limited companies love the specialists that work with us because they use the following criteria…

• No minimum income required
• 1 years accounts accepted
• 2 years accounts accepted
• No income at all needed for experienced landlords

Moving a buy to let property into a limited company

With the changes to the tax rules, transferring a buy-to-let property into a company name is becoming an increasingly attractive proposition for many landlords, but be sure to speak to a mortgage broker before you proceed to make sure this is the right option for you.

The changes include loss of mortgage interest tax relief and wear and tear for landlords with the property in their own name.

The good news is that these changes don’t apply to buy-to-lets owned by a limited company, because the properties are seen as a business, so expenses can be written off for tax purposes.

The downside is that if you already own buy-to-lets and want to transfer them, it will usually mean a sale and repurchase.

This could mean incurring a range of additional costs, including:

• Capital gains tax
• Stamp duty (including the surcharge)
• Legal fees
• Valuation and mortgage fees

There are exceptions to this in some scenarios, where if you can evidence being a portfolio landlord is your full-time role, and you own enough property (among some other things) you may be eligible for relief.

*We recommend that you speak to a tax specialist such as an accountant to assess the advantages and drawbacks of using a limited company for purchasing/managing buy-to-let properties.

Did you know… An Online Mortgage Advisor broker has access to more deals than any comparison site. Get Started to unlock more options and increase your chance of mortgage approval.

Advantages and disadvantages

For those interested in purchasing property through their limited company with a buy-to-let mortgage, there are certain advantages and disadvantages to consider.

Advantages:

• Tax: Can be seen as more tax efficient than personal income, especially for higher rate or additional earners.
• Limited liability: If the company dissolves it is not forced to sell other personal assets (unless guarantees or other security is given).
• Multiple shareholders on title deeds: Can make it easier to manage proportions of ownership and share of profits etc.
• Increased potential borrowing: Other lenders for new personal mortgages may not take these into account as commitments and therefore may allow increased personal borrowing.

Disadvantages:

• Limited number of lenders to choose from: More restrictive criteria and choice of products, which may mean higher rates/costs and less value on investment.
• Potential fees: Consider any increased legal costs and paperwork (likely to include property details and tax returns).
• Complications: A buy-to-let mortgage for a limited company may be slightly more complicated to set up.

Mortgages for Ltd companies on residential and buy-to-let investment properties can be a tricky thing to source, as not all lenders (in fact very few when you look at the whole market) are happy with such a setup.

*We recommend that you speak to a tax specialist such as an accountant to assess the advantages and drawbacks of using a limited company for purchasing a property.

How to get the best mortgage rates

To get the best rates on a limited company buy-to-let mortgage, talk to one of the advisors we work with. They have whole-of-market access, which means they can find the best buy-to-let mortgages for limited companies available. There may even be broker-exclusive deals that aren’t available to the general public that could potentially save you even more.

All lenders are different and offer different rates, depending on their lending criteria and your personal circumstances. An existing Ltd buy-to-let company with a good track record in managing rental properties profitably will be looked on more favourably than a new company.