Last updated: 21 October 2020
If you're interested in buying a property through a limited company, you'll need a limited company buy to let mortgage.
A limited company that wants to invest in a property will not be able to take out a normal residential mortgage. Instead, you'll need to look at special buy to let mortgages for limited companies.
What’s more, if you are an individual who wishes to invest in a buy to let property, you could consider setting up a limited company or special purpose vehicle (SPV) to buy it through, as this can be more tax efficient than doing so in your own name.
Around a quarter of BTL mortgages are limited company BTL mortgages. The rest of BTL mortgages can only be used for investing in property in your own name.
If you're thinking of buying this mortgage product, our limited company buy to let mortgages comparison above will be helpful to you.
How does a buy to let mortgage for limited company work?
With this mortgage, you will buy a property through your business. Instead of owning the property yourself, your company will own it.
Special Purpose Vehicle (SPV)
You can set up a limited company especially with this in mind, which is known as a special purpose vehicle (SPV). An SPV is essentially a limited company with restricted trading.
Many landlords set up an SPV purely as a tax efficient way to buy and hold investment properties. You can then get a limited company or SPV buy to let mortgage for the properties you buy.
Setting up an SPV can be a good way through which to expand your property portfolio.
After setting up a buy to let limited company, you pay money into the company. This is used as a deposit on properties you buy and the rest of the purchase price will be covered by a ltd company buy to let mortgage.
Tax when buying a property through a limited company
As mentioned, there are tax advantages to buying properties through limited companies/SPVs as opposed to buying in your own name.
Limited companies benefit from the lower rate of corporation tax, as opposed to income tax charged on earnings generated from rental income. This tax saving makes taking out a buy to let mortgage through a limited company very appealing.
However, if you're trying to avoid stamp duty, limited companies are not the answer as you still have to pay stamp duty for limited company property purchases.
In contrast, if you invest in a buy to let property in your own name, you will have to pay:
Capital gains tax if you make a profit when you sell the property
Stamp duty land tax
Tax on your rental income
How to choose the right commercial buy to let mortgage for limited company
If you're looking for a limited company buy to let mortgage, there are a few things to think about.
First, you'll need to decide what kind of mortgage you want. There are lots of different limited company buy to let mortgage criteria to consider, including:
Fixed rate, tracker or variable rate deals. Deciding the type of interest rate you want affects how much you pay and whether you are protected from future interest rate rises.
Mortgage term. A longer term means your monthly payments are lower, but a shorter term can save you money in the long term.
Interest only or repayment mortgage. Interest only deals cost less per month. But you'll need to save up separately to pay off your mortgage, or sell your property when the mortgage ends. Here's how to decide.
It's a good idea to consider these options before you start comparing limited company buy to let mortgage rates.
Check buy to let mortgage rates for limited companies
If you're after the best buy to let mortgage rates for limited companies, you should be aware of the kind of rates you can expect to see. The rates are likely to be higher than those offered for an individual landlord.
It is therefore important to do your research and compare the best buy to let mortgages for limited companies.
Limited company buy to let mortgages comparison
You can find a selection of buy to let mortgages for limited companies in the comparison table at the top of this page.
Scan through the deals to see which might work for you. Compare interest rates and don’t forget to factor in any arrangement fees and other charges.
Click 'see deal' to find out more about the mortgage products. You can arrange your results in your preferred order by clicking 'sort' at the top. And you can tailor your view by clicking 'refine results'.
We'll help you find the best ltd company btl mortgage for you.