What is a limited company buy-to-let mortgage?
A limited company buy-to-let (BTL) mortgage allows you to buy a property through a limited company or in most cases a SPV (Special Purpose Vehicle), rather than in your own name. These mortgages are becoming increasingly popular since the 2017 changes in tax rules for private landlords and as a result of recent rises in interest rates.
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Can a Ltd company get a buy-to-let mortgage?
A limited (Ltd) company can certainly be eligible for a BTL mortgage, but it may not be as easy as getting one as an individual. This is due to fewer lenders offering this type of mortgage, and those that do may have stricter criteria and higher rates and fees.
Some of the factors potential lenders will consider:
- Rental income and value of the property you want to buy or remortgage.
- The size of your deposit (usually at least 25% of the property value).
- The type and structure of your limited company (SPV or trading).
- Your personal income and credit history.
- Your experience and portfolio as a landlord in some cases.
How much can a Ltd company borrow for buy-to-let?
The amount you can borrow through a Ltd company will depend on the lender’s criteria and the affordability of the mortgage based on the rental income your property is expected to generate.
Our buy-to-let mortgage calculator will give you an idea of the kind of mortgage deals a Ltd company could get. Enter details such as property value, how much you wish to borrow, preferred monthly repayments and your expected rental income, and discover the range of mortgages you may be eligible to apply for.
Benefits of a Ltd company buy-to-let mortgage
There are some notable advantages of a limited company BTL mortgage, such as:
- Tax savings: One of the main reasons to consider buying a rental property through a Ltd company is the significant potential tax savings. Unlike a personal BTL mortgage, where the rental income is added to your other income and taxed at your personal rate, a limited company BTL mortgage allows you to deduct your mortgage payments and other running costs from your rental income and pay a flat corporate tax rate of 19%. Please note you will need a disclaimer for acquiring tax advice.
- Credit checks: With limited company BTL mortgages, you can include up to four company directors on the application, using their combined financial and credit profiles. This can help you to qualify for a better deal if you are new to property investing or have a poor credit score.
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