Getting a buy-to-let mortgages for a limited company Landlords may want to get a buy-to-let mortgage for property investment through a limited company. They will save tax on the property profits, despite alternative borrowing arrangements. There are different borrowing criteria for buy-to-let mortgages for a limited company. What are the basics? A buy-to-let mortgage for a limited company is a way to take out borrowing on mortgages for properties through a limited company rather than in your own name. These mortgages are designed to purchase and remortgage residential properties that are already leased or let, or that will be ready to let within one month of completion. It is important to consider your borrowing carefully. Individuals, companies and limited liability partnerships can apply for a buy-to-let mortgage and use borrowing in this way. Each of these specialist mortgages comes with its own set of lending criteria that must be met before the lender and borrowing accept a loan application is approved. A buy-to-let limited company also offers improved tax planning for landlords. Holding buy-to-let property in a limited company may offer some tax benefits to certain investors. Some higher-rate taxpayers find it more tax-efficient than buying buy-to-let property as a private landlord. It is worth reviewing your individual borrowing situation. Mortgages for a limited company are typically only available for Special Purpose Vehicles (SPVs). This means a limited company should be for the sole purpose of property investment, such as buying, selling and letting property. A limited company can also offset all of their mortgage interest against profits from rental income. Borrowing through a limited company is a way for some landlords to minimise financial risk on their buy-to-let mortgages. What are the lending criteria of a buy-to-let mortgage? Buying property as a limited company depends on the buy-to-let company structure. Many specialist lenders will take the following criteria into account before they approve any borrowing: – An existing SPV limited company – An existing (trading) limited company (not SPV) – Starting up a new limited company at the time of buy-to-let property purchase – A limited company with personal guarantees – A limited company without a personal guarantee – Up to 85% loan to value (LTV) – Rental income that is at least 125% of the mortgage payment – A minimum property value of £50K is sometimes required – Portfolio landlords are usually accepted for limited company buy-to-let mortgages – Minimum and maximum age terms can apply – Higher interest rates compared to a standard buy-to-let mortgage – Variable and fixed rate mortgage products are available It is worth shopping around for a limited company’s best buy-to-let mortgage deal before agreeing to any borrowing. An SPV structure also needs to carefully review the available borrowing conditions available. Can an existing LTD purchase buy-to-let? If you already own a limited company and want to refinance or purchase a new property, getting a mortgage may be difficult. Borrowing can be seen as riskier by some lenders. Most limited company buy-to-let mortgage lenders are only willing to approve companies that deal purely in the property before they sign off borrowing. What is a limited company buy-to-let mortgages? A limited company buy-to-let mortgage is a buy-to-let mortgage taken out in the name of a company. It is also called a Special Purpose Vehicle (SPV). You can use it to purchase a property to hold in your company’s name. The main benefits of getting a buy-to-let property in this way are tax related. You pay corporation tax rather than personal income tax on any rental income and profits. Borrowing has different criteria for a company or SPV. How is a limited company mortgage different to one in your name? If you are buying a property as a buy-to-let and to yield rental income, you can potentially save money by buying a rental property and securing the mortgage through a company set up solely for this purpose. This makes specialised borrowing a good option. A buy-to-let property mortgage is similar to a standard buy-to-let mortgage, but as your company will technically own the property and the mortgage, your mortgage repayments and rental earnings are treated differently for tax purposes. You need to pay higher mortgage interest rates for this kind of specialist buy-to-let mortgage, which is reflected in the conditions for borrowing. You may need a larger deposit than a standard buy-to-let mortgage if you borrow through a limited company. What are the benefits? Using a limited company or SPV offers significant tax savings, which outweigh the expenses and fees involved in setting up a company and filing its accounts. In the past, sourcing a buy-to-let mortgage was difficult, but now banks and specialist lenders are becoming increasingly keen to finance this borrowing. In looking for a buy-to-let mortgage, you will need to clarify your set-up with a buy-to-let mortgage advisor. Lending to landlords who have formed a limited company to manage their property investments has increased dramatically since 2016 and the introduction of the 3% Stamp Duty surcharge. Regarding property investors, borrowing by limited companies is on the rise. High street banks have also driven growth and interest in buy-to-let mortgages and specialist borrowing.