Limited Company Mortgages
Buying property through a company, or borrowing as a director of one? Lenders treat each very differently. We explain which kind of limited company mortgage you need and find the lenders that suit how your company is set up.
- SPV and business buy to let
- Director income assessed properly
- New companies considered
- Whole-of-market advice
broad range of UK lenders
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Tell us whether you are buying through an SPV, borrowing as a director or buying premises for your business, and we will come back with the lenders that fit and what they are likely to ask for.
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What People Mean by a Limited Company Mortgage
The phrase covers three different kinds of borrowing, and each sits with different lenders and different rules. Working out which one you need is the first step, because the wrong product can cost you the purchase or a better rate.
Company buy to let
A company, usually a special purpose vehicle (SPV) set up only to hold property, borrows to buy homes to let. This is what most people mean. See limited company buy to let mortgages.
Director buying a home
A residential mortgage for you personally, where your income comes from your own company as salary, dividends or a share of profit. See limited company director mortgages.
Company buying its premises
A trading company buying the office, shop or unit it works from. That is a commercial mortgage, assessed mainly on the business accounts, and we can arrange it too.
How Limited Company Buy to Let Mortgages Work
The company owns the property and takes the mortgage in its own name. Lenders still look closely at the people behind it: directors and shareholders are almost always asked to give personal guarantees, and their credit history, income and landlord experience all form part of the assessment.
Affordability is based on the rent rather than your salary. Most lenders want the expected rent to cover the mortgage interest by 125% at a stressed rate, whatever the directors pay in income tax, which is why the same rent can support more borrowing in a company than in the name of a higher-rate taxpayer. The worked comparison is on our limited company buy to let mortgages page.
| What lenders look at | Typical position |
|---|---|
| Deposit | 25% of the value is usual; a smaller number of lenders go to 80% loan to value at higher rates |
| Rent test | Rent covering 125% of the interest at a stressed rate, commonly around 5.5% on five-year fixes |
| Company type | A special purpose vehicle that only holds property, with SIC codes such as 68100, 68209 or 68320 |
| New companies | A newly formed SPV with no accounts is accepted by most lenders in this market |
| Guarantees | Personal guarantees from directors and usually from the main shareholders |
| Number of directors | Often capped at around four, varying by lender |
Typical positions across the specialist buy to let market. Each lender sets its own criteria; our limited company buy to let lenders and criteria guide compares ten of them.
Business Buy to Let and Portfolio Landlords
Business buy to let is another name lenders use for limited company lending, particularly once a landlord holds several properties. Under the Prudential Regulation Authority’s buy to let underwriting standards, anyone with four or more mortgaged buy to let properties is a portfolio landlord, and the lender then looks at the whole portfolio rather than only the property being bought.
Expect to provide a property schedule showing each property’s value, mortgage and rent, a simple business plan and a cash-flow forecast. Houses in multiple occupation and multi-unit blocks are also commonly bought through companies, and some lenders specialise in them.
If you already own buy to let properties personally, moving them into a company is treated as a sale. Stamp Duty Land Tax and capital gains tax can both apply, and each property needs a new mortgage, so take tax advice before deciding.
Director Mortgages: When Your Company Pays You
If you want a home for yourself and your income comes from your own limited company, you need a residential mortgage, not a company one. The question is which figures the lender uses. Most take your salary plus dividends from the last one or two years; some use your salary plus your share of the company’s net profit, which can help if you leave money in the business.
We explain both methods with examples on our limited company director mortgages page, and you can compare them with the director mortgage calculator.
Should You Buy Through a Limited Company?
It depends on your tax position, how many properties you plan to own and how long you will keep them. A company pays Corporation Tax on its profit, at 19% on profits up to £50,000 and 25% above £250,000 with marginal relief in between, and mortgage interest is deducted in full as a business cost. Individual landlords instead receive a basic-rate tax credit on mortgage interest, which costs higher-rate taxpayers more.
Against that, money taken out of the company as dividends is taxed again, rates are usually a little higher, and there are accountancy and set-up costs. Companies also pay the higher rates of Stamp Duty Land Tax on every residential purchase, including the first, and a single 17% rate can apply above £500,000 unless a relief, such as the one for a property rental business, is available.
This page explains how lenders treat company borrowing; it is not tax advice. Your accountant should confirm whether a company suits your circumstances before you buy.
What Lenders Will Ask For
Having these ready before you apply shortens underwriting and avoids the questions that most often delay a company case.
Company details
Companies House number, registered SIC codes and a list of directors and shareholders with their percentages.
Directors’ details
Identification, address history, income and credit history for each director and guarantor.
Deposit evidence
Bank statements showing where the deposit comes from, including any director’s loan into the company.
The property
Address, purchase price, expected rent and, for a house in multiple occupation, the licence and room layout.
Portfolio schedule
For four or more mortgaged properties, a schedule of values, balances and rents with a cash-flow forecast.
Personal guarantee
A signed guarantee, usually after independent legal advice, before the lender releases funds.
Not Sure Which Kind of Company Mortgage You Need?
Tell us what you want to buy and how the company is set up. We will confirm which type of mortgage applies and which lenders will look at it.
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Limited Company Mortgage FAQs
What is a limited company mortgage?
Usually a buy to let mortgage taken out by a limited company, often a special purpose vehicle set up just to hold property. The phrase is sometimes also used for a director’s personal mortgage or a commercial mortgage for business premises, which are different products.
Can a newly formed company get a mortgage?
Yes. Most specialist buy to let lenders accept a new SPV with no trading history and assess the rent, the deposit and the directors instead.
How much deposit do I need for a limited company mortgage?
Usually 25%. Some lenders go to 80% loan to value, at higher rates and with a stricter rent test.
Are limited company mortgage rates higher?
Usually slightly higher than equivalent personal buy to let rates, because fewer lenders compete for company lending. The gap varies, so compare the total cost including fees.
Do I have to give a personal guarantee?
Almost always. Directors, and usually shareholders with a significant stake, guarantee the loan, so you remain personally responsible if the company cannot pay.
Can I use my trading company to buy a buy to let?
Some lenders will, but far fewer than for an SPV, and the trading accounts are assessed too. Many landlords set up a separate SPV instead.
Is a limited company mortgage regulated?
Buy to let lending to a limited company is generally not regulated by the Financial Conduct Authority. A director’s mortgage on their own home is regulated. We explain which protections apply before you go ahead.
Can I move my existing buy to lets into a limited company?
You can, but it counts as a sale: stamp duty and capital gains tax can apply and each property needs a new company mortgage. Incorporation relief is only available where the letting amounts to a genuine business, so take advice from an accountant first.
Written and reviewed by Osman Emin, CeMAP, mortgage and protection adviser · FCA register OCE01003 · Updated YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.