Why Purchase a Buy-to-Let Property as a Limited Company?

Taking out a mortgage and purchasing a buy-to-let property through a limited/LTD company or SPV (Special Purpose Vehicle) can be more tax-efficient than doing so in your personal name as a private landlord.

Here's why.

You Pay Income Tax on Rental Income from a Privately-Owned Rental Property

  • To calculate how much Income Tax you must pay, your rental income is added to your overall personal income which may push you into a new tax bracket and result in you paying Income Tax at a higher rate

You Pay Corporation Tax on the Rental Profits on Properties Held in a Limited Company, not Income Tax

  • Unlike Income Tax, there are no upper tiers for Corporation Tax - Corporation Tax is set at a static rate of 19% (2020 – 2021), which means that’s the maximum rate you’ll be charged unless the Government change the rate of Corporation Tax itself
  • You can offset many expenses against the income for a company that you can’t with a privately-owned rental property

You can find more information on the other advantages of purchasing a buy-to-let through a limited company in our guide.

Or, keep reading to compare buy-to-let mortgage rates for limited companies and find out how John Charcol can help you.

Compare the Best Buy-to-Let Mortgages for Limited Companies

Use our free best buy tool to view the best limited company buy-to-let mortgage rates currently on the market.

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We recommend you sort by True Cost Comparison find out more

We recommend you sort by True Cost Comparison

We suggest you use our ‘True Cost Comparison’ filter. This allows you to accurately understand how different mortgages compare by ordering results based on the total cost over a ‘deal period’, such as a two, or five-year fixed rate mortgage.

Some low interest rate deals might seem attractive, but if fees are higher they might not be the best value for you. When comparing mortgage deals our true cost comparison factors the lender fees over the length of the deal as well as your monthly mortgage payments.

For example, if your repayments are £2,000 per month on a two-year fixed-rate mortgage, plus £500 in lender fees, the total cost of the deal is £48,500.

We've found 8 mortgage deals that match your search

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Scheme ID 26592
Initial rate 2.99% then 6.14% (variable) ?
Monthly repayments £ 748 ?
Type/Duration Variable ?
Scheme fees £1,950 ?
Cost comparison £19,890 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 70%
Overpayments allowed? Yes
Early Repayment charges Not Applicable

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a variable rate for 2 years at 2.9899999999999998%, and then on a variable rate for 23 years at 6.14%. This would require 24 payments of £1,421.07 and 276 payments of £1,919.05. The total amount payable would be £743,700 made up of the interest (£741,750) and fees (£2,100 which includes exit fees of £150). The overall cost for comparison is 5.90% APRC representative.

0344 346 3672 or Enquire now

Scheme ID 29333
Initial rate 2.99% then 6.14% (variable) ?
Monthly repayments £ 748 ?
Type/Duration Variable ?
Scheme fees £1,950 ?
Cost comparison £19,890 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 70%
Overpayments allowed? Yes
Early Repayment charges Not Applicable

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a variable rate for 2 years at 2.9899999999999998%, and then on a variable rate for 23 years at 6.14%. This would require 24 payments of £1,421.07 and 276 payments of £1,919.05. The total amount payable would be £743,700 made up of the interest (£741,750) and fees (£2,100 which includes exit fees of £150). The overall cost for comparison is 5.90% APRC representative.

0344 346 3672 or Enquire now

Scheme ID 26594
Initial rate 3.1% then 6.14% (variable) ?
Monthly repayments £ 775 ?
Type/Duration Variable ?
Scheme fees £1,950 ?
Cost comparison £20,550 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 70%
Overpayments allowed? Yes
Early Repayment charges £150, plus (2% in year 1, 2% in year 2)

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years at 3.1%, and then on a variable rate for 23 years at 6.14%. This would require 24 payments of £1,438.29 and 276 payments of £1,920.65. The total amount payable would be £744,360 made up of the interest (£742,410) and fees (£2,100 which includes exit fees of £150). The overall cost for comparison is 5.91% APRC representative.

0344 346 3672 or Enquire now

Scheme ID 29385
Initial rate 3.1% then 6.14% (variable) ?
Monthly repayments £ 775 ?
Type/Duration Variable ?
Scheme fees £1,950 ?
Cost comparison £20,550 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 70%
Overpayments allowed? Yes
Early Repayment charges £150, plus (2% in year 1, 2% in year 2)

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years at 3.1%, and then on a variable rate for 23 years at 6.14%. This would require 24 payments of £1,438.29 and 276 payments of £1,920.65. The total amount payable would be £744,360 made up of the interest (£742,410) and fees (£2,100 which includes exit fees of £150). The overall cost for comparison is 5.91% APRC representative.

0344 346 3672 or Enquire now

Scheme ID 38432
Initial rate 3.49% then 6.01% (variable) ?
Monthly repayments £ 873 ?
Type/Duration Variable ?
Scheme fees £5,635 ?
Cost comparison £26,575 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £150, plus (3% until 31-07-21, 2% until 31-07-22)

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 3 months at 3.49%, and then on a tracker rate for 22 years and 9 months at 6.01%. This would require 27 payments of £1,500.26 and 273 payments of £1,900.13. The total amount payable would be £739,525 made up of the interest (£733,890) and fees (£5,785 which includes exit fees of £150). The overall cost for comparison is 5.91% APRC representative.

0344 346 3672 or Enquire now

Scheme ID 205832
Initial rate 3.49% then 6.01% (variable) ?
Monthly repayments £ 873 ?
Type/Duration Variable ?
Scheme fees £5,635 ?
Cost comparison £26,575 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £150, plus (3% until 31-07-21, 2% until 31-07-22)

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 3 months at 3.49%, and then on a tracker rate for 22 years and 9 months at 6.01%. This would require 27 payments of £1,500.26 and 273 payments of £1,900.13. The total amount payable would be £739,525 made up of the interest (£733,890) and fees (£5,785 which includes exit fees of £150). The overall cost for comparison is 5.91% APRC representative.

0344 346 3672 or Enquire now

Scheme ID 38434
Initial rate 3.64% then 5.76% (variable) ?
Monthly repayments £ 910 ?
Type/Duration Variable ?
Scheme fees £4,535 ?
Cost comparison £26,375 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £150, plus (3% until 31-07-21, 2% until 31-07-22)

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 3 months at 3.64%, and then on a tracker rate for 22 years and 9 months at 5.76%. This would require 27 payments of £1,524.49 and 273 payments of £1,860.52. The total amount payable would be £722,375 made up of the interest (£717,840) and fees (£4,685 which includes exit fees of £150). The overall cost for comparison is 5.68% APRC representative.

0344 346 3672 or Enquire now

Scheme ID 205833
Initial rate 3.64% then 5.76% (variable) ?
Monthly repayments £ 910 ?
Type/Duration Variable ?
Scheme fees £4,535 ?
Cost comparison £26,375 ?

Fees & Charges

Booking fees £0
Arrangement fees £0
Valuation fees £0
Other fees £0
Cashback £0

Flexibility

Max LTV 60%
Overpayments allowed? Yes
Early Repayment charges £150, plus (3% until 31-07-21, 2% until 31-07-22)

Other info

Exit fees £150
Basic legals £0

Representative example: A mortgage of £300,000 payable over 25 years on a repayment basis, initially on a fixed rate for 2 years and 3 months at 3.64%, and then on a tracker rate for 22 years and 9 months at 5.76%. This would require 27 payments of £1,524.49 and 273 payments of £1,860.52. The total amount payable would be £722,375 made up of the interest (£717,840) and fees (£4,685 which includes exit fees of £150). The overall cost for comparison is 5.68% APRC representative.

0344 346 3672 or Enquire now

How Can John Charcol Help with Your Limited Company Mortgages?

We Take Care of Everything

With over 45 years of service, we've seen it all. We can save you money, time and make buying your property easy.

We're Highly Recommended

We have over 1,500 5* reviews on reviews.co.uk, so you can feel confident that your mortgage is in the right hands.

We Give Personal, Expert Advice

We work around your schedule to help you arrange a mortgage that suits your circumstances, no matter how complex.

Our Limited Company Buy-to-Let Mortgage/Refinancing Process

1. Meeting with Adviser and Mortgage Research

Meeting with Adviser and Mortgage Research

When you phone us, you can either arrange a phone appointment with your adviser or a face-to-face meeting – whatever suits you. Your adviser will ask you some questions and, once they have all the information they need, they’ll go away and find you the buy-to-let mortgage for your circumstances and future needs. They’ll also arrange a follow up call to present you with what they’ve found. It may require more than one conversation to gather all the right information, depending on where you are in your property search.

2. Decision in Principle

Decision in Principle

Once you’re happy with their recommendation, you adviser will go about securing your DIP (Decision in Principle) - which is basically a promise from the lender that they’ll loan you money on the condition that the information you’ve provided is correct and subject to a valuation of the property.

3. Offer on Property/Refinancing

Offer on Property/Refinancing

After you’ve secured a DIP (Decision in Principle), you’ll be in a great position to make an offer on a property or move forward with refinancing and possibly changing ownership from private landlord to limited company.

4. Pre-Application and Submission

Pre-Application and Submission

Following the acceptance of your offer, we’ll send you some information which explains all the documents we need to submit to the lender. You’ll be assigned a client relationship manager who’ll check and submit certified copies of your documents; they’ll liaise with both you and the lender. Your adviser will then submit the fully packaged mortgage application.

5. Lender Underwriting and Valuation

Lender Underwriting and Valuation

The lender will underwrite your application; this basically means they’ll verify the information you’ve provided and review all your documents for themselves. They’ll also instruct a valuation for their purposes on the property.

6. Mortgage Offer

Mortgage Offer

If the lender is happy with everything they’ve found, they’ll send you a mortgage offer. They’ll also send us a copy.

7. Conveyancing

Conveyancing

After you’ve accepted your mortgage offer, you’ll go through the legal part of the process, known as conveyancing. This is where the solicitors/conveyancers draw up contracts and organise the actual, legal purchase of the property/refinancing. If buying, you’ll also need to arrange buildings insurance at this stage, making sure it’s in place from exchange.

8. Exchange and Completion

Exchange and Completion

Once everything is in place, your conveyancer/solicitor will exchange contracts with the seller’s conveyancer/solicitor. It’s at this point that you put down your deposit and are legally bound to buy the property. You’ll lose your deposit if you pull out after exchange. The purchase completes when money is transferred on an agreed-upon date. As soon as you have a date for completion you’ll know when the property can take tenants, therefore you can start speaking to a letting agent. If you’re refinancing, then your conveyancer/solicitor will set a date to draw down the funds and pay off any existing lender(s) once the mortgage offer’s released.

Additional Services

JC Legal

We can refer you to a solicitor experienced in conveyancing for limited company buy-to-let mortgages.

Insurance

We can arrange buildings and contents insurance for properties owned by limited companies through our partnership with Legal and General.

Protection

Our in-house protection team can find you protection cover for buy-to-let limited company directors tailored to suit your specific requirements.

How to Get a Mortgage Through a Limited Company

Speak to a Mortgage Broker

You’ll need a specialist mortgage broker like John Charcol to apply for a limited company buy-to-let mortgage. Not only do we understand what criteria you need to meet for your mortgage, but most limited company buy-to-let mortgage lenders won’t accept your application unless you use an intermediary.

Consult a Tax Adviser or Accountant

For help setting up a limited company for buy-to-let purchases, consult a tax adviser/accountant. They’ll be able to make sure everything is set up properly.

You may want to approach a tax adviser/accountant before speaking to a mortgage adviser. That way, your limited company can be set up and you’ll be ready to start the mortgage application process when you first speak to your mortgage adviser.

Nonetheless, if you want some more information limited company buy-to-let mortgages before setting up your limited company, then give us call on 0344 346 3672 and we’ll answer your questions.

Limited Company Buy-to-Let FAQs

What’s the Difference Between a Limited Company, LTD and SPV?

  • A limited company is a company that’s owned by private investors; it’s not on the stock exchange. These investors are legally responsible for the company’s debts, but only to extent of the amount they’ve invested
  • An LTD company is the same as a limited company. Some people simply prefer to use “LTD” instead of “limited”. It’s entirely an aesthetic choice
  • An SPV (Special Purpose Vehicle) is a limited company which is set up specifically to manage properties. You set one up precisely for the purpose of taking out a limited/LTD company buy-to-let mortgage

How Do I Set Up a Limited Company/Get an SPV for a Buy-to-Let Mortgage?

To take out a buy-to-let mortgage through a limited company, your limited company needs to have been set up with the purpose of buying/selling/managing property.

If you don’t already have a suitable limited company, you can set up an SPV. An SPV is a company you set up to buy/sell/manage property, specifically so that you can get a buy-to-let limited company mortgage.

It’s important you speak to an accountant as they can help make sure that your SPV is set up with certain SIC codes and definitions in mind.

See our guide for how to set up a limited company for buy-to-let purchases and for information about SIC codes.

Can I Buy a House Through My Limited Company?

You can buy a house through a limited company if you’re using company funds to buy the property outright, but very few people ever do this as there are certain tax implications.

However, you can’t take out a mortgage for a main residence through a limited company like you can for a buy-to-let property.

Can a Limited Company Get a Buy-to-Let Mortgage?

You can take out a buy-to-let mortgage through a limited company. The buy-to-let property you purchase with the mortgage will be owned by the limited company. Many people choose to do this - rather than take out a buy-to-let mortgage and purchase a property as a private landlord - because it can be much more tax-efficient and better for Inheritance Tax purposes.

What Is the Criteria for a Limited Company Mortgage?

The criteria for limited company buy-to-let mortgages are fairly similar to the criteria for normal buy-to-let mortgages.

 There are a couple of things to bear in mind though:

  • The limited company has to be set up/have been set up with the purpose of buying/selling/managing property
  • The assessment criteria for limited company buy-to-let mortgages can vary
  • The lender will often consider the personal financial history of the company director(s) and will usually require that the director(s) personally guarantees the debt
  • There’s usually no minimum time that the company has to be incorporated for
  • The lender won’t ask for trading figures

How Many Mortgages Can I Have Through a Limited Company?

You can have as many mortgages as your lender will allow. Some lenders will let you have up to 4 or 5 mortgages with them. They’ll also often have a limit on the total amount you can borrow with them and a total borrowing limit across all lenders.

If the overall figure you want to borrow becomes too high then you’re essentially running a commercial operation and should therefore take out a commercial mortgage(s).

Are Limited Company Buy-to-Let Mortgages More Expensive than Individual Buy-to-Let Mortgages?

Rates for limited company buy-to-let mortgages tend to be a little bit higher than the ones for personal buy-to-let mortgages. You can view current rates using our best buy tool above.

Do I Need a Commercial Mortgage?

You’ll need a commercial mortgage if the overall figure you want to borrow across lenders is too high for a limited company buy-to-let mortgage.

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