A buy to let mortgage is designed for people who are interested in buying a property that they want to rent out as an investment. If you are looking to make money by renting out your property instead of living in it, then a buy-to-let mortgage is the type of mortgage you will need.
We can give you advice tailored to your needs for standard BTL, HMO, Multi-units, Limited Company BTL (SPV) and Expat BTL mortgage and get you the best deal on the market with research based on our understanding of your tax liabilities and the BTL structure options.
By undertaking an independent assessment of the market, we can provide a bespoke solution to suit the needs of individuals and companies alike. Whether you are starting out with your first buy to let property or expanding your existing portfolio, we can help you getting the best deal on your standard/SPV/HMO/ Multi-units and LTD co. Buy to Let mortgage.
Some Buy to Let mortgages are not regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up with repayments.
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 from one or more directors. 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.
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 if you are portfolio landlords (4 or more BTL properties).
Minimum 20% deposit required but higher deposit helps getting lower interest rate.
It’s tax-efficient: If you’re a higher-rate taxpayer or have multiple properties, you usually save money on tax when you take out a company BTL. Profits are taxed at the corporation tax rate, which is lower than the personal income tax rate.
Better for growing your portfolio: You can reinvest profits within the company without paying personal income tax, helping you expand faster.
Better for legacy planning: It’s easier to transfer ownership of a company than individual properties. Properties owned by a company may avoid certain taxes when passed on.
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.
Additional costs: 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 slightly more interest compared to an individual buy-to-let.
If you’re concerned about your mortgage rate, let us help to 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.