A limited-company buy-to-let mortgage is borrowing taken by a company to buy or refinance rental property. It can suit some landlords, but it is not automatically cheaper or more tax-efficient. Mortgage advice and tax advice answer different parts of the decision.
What lenders assess
- The expected rent and the lender's interest coverage calculation
- The deposit, commonly 25% or more depending on the property and application
- The directors and shareholders behind the company
- Your experience as a landlord and the size of any existing portfolio
- The company structure and its business activities
Special-purpose companies and personal guarantees
Many lenders prefer a special-purpose vehicle set up for property letting using accepted SIC codes. Directors are commonly asked to give personal guarantees, so limited liability does not mean the borrowing carries no personal responsibility.
Buying personally or through a company
Company borrowing can have higher rates and fees, while the tax treatment of rental income and future withdrawals depends on your circumstances. Speak to a qualified tax adviser or accountant before deciding on ownership structure. A mortgage adviser can then compare lenders that support the chosen route.
Do not forget purchase and running costs
Budget for the additional-property stamp duty rates, legal work, valuation, accountancy, insurance, maintenance and periods without rent. Read the stamp duty guide and our buy-to-let mortgage advice.
Expert tip: Settle the ownership and tax approach before making an offer. Moving a property between personal and company ownership later can create tax, legal and refinancing costs.
This guide is general information, not personal advice. Figures are correct at the time of updating and rules can change. Your home may be repossessed if you do not keep up repayments on your mortgage.
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