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08000 38 37 36If you want to expand your property portfolio, a limited company buy-to-let (BTL) mortgage might be the best option. Taking out a mortgage as a limited company can help you purchase property in a tax-efficient way as you expand your investments. If you think a limited company buy-to-let mortgage might be a good fit, our specialist brokers will find you the best deal.
As the name suggests, a limited company buy-to-let mortgage is a mortgage that's designed for limited companies that want to invest in residential or commercial properties to rent them out. While they have similarities with personal buy-to-let mortgages, the property is in the company name, rather than yours.
There are a few key differences between a limited company and a personal buy-to-let mortgage. The most notable ones are:
| Feature | Limited Company BTL | Personal BTL |
|---|---|---|
| Ownership | Owned by a limited company | Owned by an individual |
| Tax | Subject to corporation tax | Subject to income tax |
| Liability | Limited liability for shareholders/directors | Full personal liability for the borrower |
| Interest rates | Typically higher due to perceived higher risk | Typically lower compared to limited company mortgages |
| Borrowing amount | Typically lower compared to limited company mortgages | Generally lower loan amounts |
A limited company buy-to-let mortgage works in the same way a buy-to-let mortgage does, except you use a limited company to purchase your rental property. This means your name won't be listed on the mortgage, which helps you keep your personal and business properties separate.
While it's easy to assume that you don't need a guarantor for a company buy-to-let, that's not true. As a shareholder or director, you'll need to provide a personal guarantee. This is to stop dishonest investors from thinking that they don't need to repay their mortgage.
This personal guarantee is often one of the directors. Occasionally, lenders can request that a non-director be the guarantor. They'll be required to surrender their personal assets and wealth if your company defaults on the mortgage and there is a shortfall post-sale, so a guarantor must understand this fully before they agree.
To make sure you get the right terms for your limited company buy-to-let mortgage, let our experts help. With over 25 years of helping businesses secure mortgages, we'll help you unlock favourable mortgage rates and terms.
Lenders will look at your projected rental income to assess how much you can afford to pay back each month. Your rental income will need to be at least 125% of your mortgage repayments, sometimes higher.
This buffer is to make sure that other landlord costs (like maintenance, insurance and void periods) are covered.
If you're wondering how much you can borrow, be sure to use our buy-to-let mortgage calculator for an accurate estimate.
If you're a higher-rate taxpayer or have multiple properties, you usually save money on tax when you take out a company BTL. If you take out a personal buy-to-let mortgage, you'll be taxed on any income from your buy-to-let.
If you choose a company buy-to-let mortgage, your profits are taxed at the rate of corporation tax, which is around half of the personal tax rate.
If you have a limited company buy-to-let, you can keep your profits within the company without paying income tax. This money can be reinvested into more properties, helping you expand your portfolio faster.
If you want to pass on your business to future generations, it's much easier to transfer the ownership of a company than a privately owned property. If a company owns the property, it'll be protected from stamp duty, capital gains tax and inheritance tax.
If you purchase property as a company, you're not personally liable for debts incurred with your buy-to-let. It's important to remember that you're not completely off the hook, though – most lenders will require you to make a personal guarantee.
Although you'll be saving money on tax, you'll need to factor in the additional costs associated with running a limited company. For example, you'll need to pay for:
As corporate lending is deemed high-risk, you'll pay more interest compared to an individual buy-to-let.
If you're concerned about your mortgage rate, let us help. Our mortgage specialists at Alexander Hall have strong relationships with hundreds of lenders, so we can secure you the best possible deal.
If you pay the basic tax rate and only own a few properties, the cost of running a limited company is unlikely to be worthwhile until your salary increases.
Getting a buy-to-let mortgage as a limited company works like getting a standard buy-to-let mortgage. The key difference is that, to be able to secure your mortgage, you'll need to form a limited company (if you haven't already) and provide financial documentation.
You need to meet the eligibility requirements to be able to secure a buy-to-let company mortgage. It varies between lenders but normally you'll need to meet the following criteria:
The first step is sharing your situation and goals with us. This means we can find the best lenders and deals for you.
We let you know which documents you need to provide for your LTD company buy-to-let mortgage application. If you need us to, we can help you prepare them, too.
Once you've chosen a property, we'll leverage our extensive network to secure the best mortgage for you. We handle the entire application process, ensuring it's as straightforward as possible.
The lender will perform a valuation and their underwriter will review your application to ensure it meets their criteria. We supply any additional information required, facilitating a smooth progression through this stage.
When the lender is satisfied with the checks, they'll issue a formal company BTL mortgage offer. We'll support you with the legal details and contract exchanges so you're not bogged down with paperwork.
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We've been helping companies acquire properties for over 30 years. With best-in-class mortgage advice and a vast lender network, our expert brokers have the knowledge and connections to secure you the best deal. Here are some reasons why you should choose us:
Here is a selection of the most common questions our advisers are asked.
