Limited Company Buy to Let

Are you considering a Limited Company Mortgage?

A limited company mortgage is a specialised product obtained through a registered limited company rather than in an individual’s name. While offering certain tax advantages, these mortgages also come with specific considerations worth exploring.

Due to fewer high street lenders offering these types of mortgages, rates are often higher. The Mortgage Choice, an experienced mortgage brokers can help you navigate the challenges associated with limited company mortgages. We can help you secure the best deal available from specialist lenders while guiding you through the process.

Understanding Limited Company Mortgages

Changes in buy-to-let property taxation have led many portfolio landlords to opt for buy to let mortgages through limited companies to increase their rental profits. Typically, these mortgages are taken out using a Special Purpose Vehicle (SPV), a company established solely for property transactions. Some lenders also extend mortgage options to trading companies and partnerships.

What Are the Benefits of A Limited Company Mortgage?

Portfolio landlords, owning four or more properties, often use limited companies to hold their properties for enhanced tax efficiency. Even individual landlords are increasingly considering registering rental properties through limited companies.

The primary advantage for you lies in tax relief, as mortgage interest and arrangement fees can be deducted before paying Corporation Tax, whereas individual landlords paying personal income tax cannot deduct mortgage interest and arrangement fees from rental income when paying income tax.

*It’s crucial to seek professional tax advice before making any decisions on a limited company mortgage.

How do I Apply for a Limited Company Mortgage?

Securing a mortgage through a limited company involves several steps. To begin with you must register your limited company as an SPV with Companies House for a small administrative fee. Alternatively, enlist the services of a lawyer or accountant for assistance.

Next, you must select a Standard Industrial Classification code representing your company’s activities, with options tailored to property-related ventures. There are 4 SIC codes related to property for SPVs:

• 68100: For buying, renovating, and selling properties (commonly known as ‘flipping property’).
• 68209: For buy-to-let properties held and rented out.
• 68320: For managing your or others’ real estate for a fee.
• 68310: Used by real estate agencies.

Once this has been organised you then must complete the mortgage application paperwork. Use mortgage Broker who has experience in this field.

Then, set up a Business Account for the limited company and ensure timely registration for Corporation Tax within 90 days to comply with legal requirements.

The Mortgage Choice has extensive experience in handling limited company mortgages and as an experienced mortgage brokers we can help you navigate the challenges associated with them. We deal with many portfolio Landlords and know exactly how to help!

Am I eligible for a Limited Company Mortgage? 

Lenders typically require comprehensive financial information to assess your eligibility for a limited company mortgage. Because a limited company mortgage is a commercial mortgage, it may be necessary to supply your company accounts to verify your income adequacy for mortgage repayments.

If you have only just set up your SPV, you will not have company accounts so company directors will usually need to have a minimum income of £25,000 to be eligible. However, some lenders have no minimum income requirements.

Additional eligibility criteria may include multiple directors/shareholders, personal guarantees, and specific Loan to Value (LTV) ratios, this is often capped at 75% which means you may need a higher deposit than for a traditional buy to let product.

Connect with The Mortgage Choice today for help navigating Limited Company Mortgage.

Pursuing property investments through limited company mortgages presents opportunities for increased profitability and tax benefits. However, it’s essential to seek professional financial advice before proceeding.

At The Mortgage Choice, we’re committed to helping you make informed decisions and achieve your investment goals.

Contact us today to explore your options and secure the right limited company mortgage for you!

OUR PROMISE TO YOU

We will carefully assess your personal circumstances, your mortgage requirements and based on this we will make a recommendation giving you the most suitable mortgage advice.

themortgagechoice is located in Byfleet, Surrey. We have clients in Guildford, Woking, Weybridge, Chertsey, Leatherhead, Cobham and across the UK.

Your home may be repossessed if you do not keep up repayments on your mortgage.

NOT ALL BUY TO LET MORTGAGES ARE REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.