Buy to let mortgages for limited companies in the UK
If you are interested in owning property through your limited company mortgage (Ltd), you might ask how to qualify for the best buy-to-let mortgage(BTL).
This type of mortgage could be denied to many companies due to poor mortgage advice or not having discussed their mortgage application beforehand.
It’s possible to obtain a buy-to-let limited company mortgage through your limited company. As long as you receive the right advice tailored to your business needs, it’s possible. The mortgage broker experts we work with have extensive experience in buy-to-let loans, enquire below now:
Can my UK limited company get me a mortgage which is a buy-to-let mortgage?
The truth is that most high-street lenders don’t offer limited company mortgages and instead focus on more traditional mainstream business. A limited company may be unable to provide a buy-to-let mortgage.
This could lead to borrowers taking out personal loans and missing out on the many benefits of this limited company mortgage.
Many investors have small to large portfolios, and the tax benefits of purchasing property through a limited company are significant, especially for taxpayers at higher or additional rates.
Lenders who want to purchase property in a group rather than two individuals and are looking to avoid personal liability should something go wrong can also benefit from an Ltd Company Mortgage.
Enquire here today to discuss limited company mortgages or investment mortgage contracts.
Our mortgage brokers offer free advice for limited company mortgages, residential property buy to let property, rental income and any other mortgage questions you may have.
Criteria and eligibility for limited company mortgages
Buying a property through a limited company is possible, depending on how the buy-to-let company structure works.
These criteria will be taken into account by many lenders:
- A company that is already an SPV
- A trading company that is not an SPV but an existing trading LTD company
- At the time of purchase, start a new ltd business
- LTD companies with personal guarantees (PGs).
- LTD companies with personal guarantees (PGs).
- Maximum 86% LTV / Loan to Value.
- Rent income must be equal to or greater than 125% of the mortgage payment
- Acceptance of minor adverse credit
Send an enquiry for tailored advice about the criteria required for a limited company buy-to-let mortgage. Then, we’ll connect you with the right person.
Existing limited companies
It can be challenging to get a mortgage if you own a Ltd business and want to refinance it or buy a new property.
Our mortgage brokers have easy access to all the markets and can arrange buy-to-let limited company mortgages for both new and existing clients.
Most limited company buy-to-let mortgage lenders won’t approve companies that deal only in the property.
However, a few lenders will consider trading companies in other areas. They won’t accept businesses that trade in different areas and are interested in purchasing a property.
These deals would be considered commercial and would require a specialist commercial mortgage. We can help you get a limited company mortgage with buy to let solutions.
An existing SPV limited company can purchase a buy-to-let.
Limited Companies are those that only trade in rental properties. Lenders can classify them differently depending on the Standard Industry Classification code (SIC) that the company has registered at Companies House.
These are typical:
- Buying and Selling Your Real Estate
- 68201: Renting out and operating Housing Association real estate
- 68209: Other leasing and operation of own or leased real property
- 68320: Real estate management on a contract or fee basis
For SPVs, obtaining a BTL can be easier than in other SIC categories. There are many options depending on the situation.
Existing trading LTD companies (not SPV)
A few lenders will consider lending mainstream buy-to-let mortgages to Ltd businesses that are already trading. You don’t necessarily have to trade in property for this business.
These mortgage types require a 25% deposit because there are few lenders.
Establishing a property company to buy and let
Based on the current criteria of a select lender, new limited company mortgages may also be possible. The Ltd company must be formed at the time of the application. They are registering with Companies House as an SPV.
Lenders will lend at 85% loan-to-value and base affordability based on the rental income. Income must be at least 125% of mortgage payments to be accepted. Some lenders may ask for more, such as 150% or even 180% depending on the circumstances.
Credit scoring will require at least two directors (or one if the director is solely named) to prove the company’s creditworthiness. The company will not have a credit history. To establish affordability, the lender will need to verify the income of directors.
It is possible to get finance even if the directors have adverse credit. However, the lender may still approve the loan if the other criteria are met. Our in-depth guide will provide more information about obtaining a mortgage with adverse credit.
Because they follow the following criteria, specialists who work with us are a favourite of directors of limited companies…
- No minimum income required
- Acceptance of 1-year accounts
- Accepted for two years
- Experienced portfolio landlords need no income
Transferring a buy-to-let property to a limited company
Many landlords are finding it increasingly attractive to transfer a buy-to-let property to a company name due to changes in the tax rules. However, you should consult a mortgage broker before proceeding to ensure this is the best option.
These changes include the loss of tax relief on mortgage interest and wear and tear for landlords who own the property.
These changes won’t apply to buys-to-lets that limited companies own. The properties are considered a business, and expenses can be deducted for corporation tax purposes.
However, if you already have buy-to-let properties and wish to transfer them, it will often mean a sale or repurchase.
You could be charged additional fees, such as:
- Capital gains tax
- Stamp duty (including surcharge)
- Legal fees
- Mortgage fees and valuation
You may be eligible for relief if you prove that you are a landlord eligible for a buy-to-let portfolio mortgage and have enough properties (among other things).
*We recommend you consult a tax professional such as an accountant to evaluate the benefits and drawbacks of using a limited company to purchase/manage the buy-to-let property. Paying income tax is a job for accountants.
There are advantages and disadvantages.
There are some advantages and disadvantages for those who want to purchase property through a limited company with a mortgage.
Advantages:
- Tax: This is more tax-efficient than personal income, particularly for those with higher rates or additional earners.
- Limited Liability: The company is not obligated to sell any personal assets if it dissolves or liquidates unless guarantees or other security exist.
- Multiple owners on title deeds This can make it easier to manage ownership percentages, profit share, etc.
- Higher potential borrowing: Other lenders may not consider these commitments when granting personal mortgages.
Disadvantages:
- Fewer lenders to choose: Less choice and more restrictive criteria may lead to higher rates/costs/investment.
- Possible fees: Be aware of any additional legal costs and paperwork (likely, to include property details or tax returns).
- Complexities: A buy-to-let mortgage for a limited company might be a little more challenging.
It can be difficult to source mortgages for Ltd companies that are residential or buy-to-let properties. Not all lenders, in fact, very few, would approve of such an arrangement.
*We recommend you consult a corporation tax specialist, such as an accountant, to determine the benefits and drawbacks of using a limited company to purchase a property.
How to get the lowest mortgage rates for limited company mortgages
Talk to one of our advisors to get the best rates for a buy-to-let mortgage for limited companies. Because they have access to the entire market, they can help you find the best buy-to-let mortgages available for small companies.
Broker-exclusive deals that you might not find elsewhere may be available, which could save you even further.
Each lender is different and offers different rates depending on your personal circumstances and lending criteria. A well-respected Ltd buy-to-let business with a track record of managing rental properties profitably is more likely to be considered than a brand new company.
Speak to a specialist in buy-to-let mortgages for limited companies
It’s a smart idea to get the right advice before applying for a limited-company buy-to-let mortgage.
Our network has several expert mortgage brokers specialising in limited company buy-to-let. They can provide you with individualised guidance and assist you with all paperwork.
We’ll set up a no-obligation, free chat between you and your buy-to-let brokers. Enquire below now: