Limited Company Mortgages

Limited Company Mortgages

Limited company mortgages are becoming an increasingly popular choice for landlords. This is mostly due to a different tax treatment compared to individual ownership and a more favourable rental affordability calculation. Read our guide to learn more about limited company mortgages, and contact us if you need any help.​

Limited company mortgages are an increasingly popular way landlords manage their properties. By owning a property through a limited company, landlords can benefit from potentially lower tax liabilities and more generous lending terms from lenders.

This guide will provide insight into the advantages of holding a buy-to-let via a limited company and how landlords can access finance. We will also provide information about existing properties owned in personal names and advice on the ideal route for individual landlords.

We are not tax experts, but we can give you tips on the key questions to ask your buy-to-let tax adviser when seeking specialist tax advice. It is wise to consider the tax implications of how you hold the ownership of a buy-to-let property before undertaking any purchase or remortgage. Limited company mortgages may be the right solution for landlords with the proper guidance but not in every case.

What is Limited Company Mortgages?

Limited company mortgages are mortgages taken out by limited companies to purchase buy-to-let properties.

These mortgages allow landlords to benefit from potentially reduced tax liabilities and access specialist finance that may not be available with personal purchases.

Ownership of the property is held by the company rather than an individual. As such, different tax rules and regulations apply.

Advantages of Limited Company Mortgages

Limited company mortgages offer a range of advantages for landlords, from potentially lower tax liabilities to more generous lending terms.

Some of the key advantages of limited company mortgages are:

  • Potentially lower tax liabilities due to corporation tax rates being generally lower than income tax rates
  • Limited companies are separate legal entities, so they offer limited liability protection to landlords
  • Access to specialist finance that may not be available for personal purchases
  • Separation of personal and business finances, allowing landlords to manage their portfolios more efficiently

Benefits Of Speaking To A Buy To Let Mortgage Advisor

We Consider Your Circumstances

We take the time to understand your individual circumstances. Whether this is your first investment property or you are adding to your portfolio, we’ll review your requirements and recommend the most suitable buy to let mortgage.

We Are On Your Side

We work for you not the lender and will act solely in your best interests. You can therefore be confident that the buy to let mortgage we recommend will be the best available product to suit your circumstances as an investor.

We Do The Hard Work For You

At Your Mortgage Options we leave no stone unturned in our expensive market research when it comes to buy to let mortgages. We also handle the whole process end to end including filling your application form.

We have access to 180+ Lenders

With so many options available, only looking at deals from one lender means you’re unlikely to end up making the best possible choice. Our buy to let mortgage advisors have access to 1000s of product, including products not available from high street lenders.

Alternative Tax Treatment

One of the key advantages of limited company mortgages is that landlords can benefit from potentially lower tax liabilities. Corporation tax rates are generally lower than income tax rates, so landlords can enjoy tax savings over personal ownership by owning a property through a limited company.

Several factors should be discussed with your tax specialist before deciding on this route, as it is not always beneficial for everyone. Things like your personal tax rate, the level of yield you are achieving from your property, how much access you want to the income from your property or whether you are investing for capital growth all need to be considered.

Generous Lending Terms from Lenders

In 2017, the Government introduced new rules that limit the tax relief against mortgage interest payments to the basic tax level for buy-to-let property held in an individual name. As such, lenders have to allow for higher tax bills for higher-rate taxpayers when calculating buy-to-let affordability.

However, when the property is purchased via a limited company, all of the mortgage payments can be fully offset against the rent before calculating profit for tax purposes. Therefore lenders are able to offer more generous lending terms when providing mortgages for limited companies.

Not only can limited companies offer tax advantages, the way lenders use the legislation rules to calculate affordability often means higher borrowing capacity. This is an attractive option for landlords looking to manage their finances more efficiently or obtain a better return on investment.

Mortgage Advice..

Thinking of getting a mortgage? Our experienced team of skilled mortgage advisers are here to offer the essential guidance you require. Relying on our comprehensive understanding of the mortgage market, we’ll ensure you secure the perfect mortgage to suit your specific situation. 

Specialist Buy-to-Let Finance

Limited company mortgages are classed as a type of specialist finance, offered by specialist buy-to-let mortgage lenders.

In most cases the Limited Company used is a UK based limited company with UK based directors and shareholders.

However, some specialist buy-to-let lenders will consider offshore companies or UK companies that have non-UK resident shareholders or directors.

The typical maximum number of directors or shareholders for a Limited Company buy-to-let mortgage is a total of 4. However, some lenders do not put a limit of the number of directors and shareholders in their limited company buy-to-let criteria.

Access to Specialist Finance

Limited company mortgages can provide an attractive solution for landlords who already own a portfolio of properties in their personal name but are considering their options for new purchases. Purchasing a new property inside a limit company can be quite straight forward.

Landlords could benefit from reduced tax liabilities and more favourable lending terms by transferring ownership of an existing portfolio a limited company but there are a number of complications and costs to consider.

The company structure also allows access to specialist finance that may not be available for personal purchases. This means landlords can take advantage of the benefits offered by limited company mortgages, even when they already have existing properties.

Advice on Transferring Personal Property to a Limited Company

When considering transferring personal property to a limited company, it is crucial to seek professional advice from your accountant or tax specialist. They can assess the individual’s financial situation and advise on whether this option suits their needs.

Transferring existing buy-to-let property in individual ownership to a limited company is not straight forward. This is because you and your limited company are separate legal entities. Therefore you need to ‘sell’ the property from yourself to your limited company.

This can trigger costs such as Capital Gains tax on the sale and stamp duty on the purchase. This is why you must seek specialist tax advice to use any possible mitigants available to your circumstances.

Many specialist buy-to-let lenders are happy to lend if you and your tax-adviser agree to move existing properties to a limited company. They will treat the applications as a purchase rather than a re-mortgage. Because the applications will be treated as a purchase they will expect a deposit to be paid, but can be flexible on how this is structured.

Synergy financial have specialist buy-to-let limited company mortgage advisers who can expertly guide you through the complexities.

By taking advantage of the benefits offered by a limited company structure, landlords can provide their businesses with greater financial security and access to more favourable lending terms.

Range of Lenders Who Consider Clients with Limited Companies

A range of lenders will consider clients with limited companies when applying for mortgages. This includes banks, building societies and specialist lenders who offer tailored mortgage solutions for businesses and landlords.

The lender will assess the company’s financial situation and creditworthiness before approving a loan application, but will also accept brand new limited companies.

If you think about the company as a ‘wrapper’, the underlying borrowers are the shareholders and directors of the company. Therefore, the lender will asses the creditworthiness and financial situation of each director and shareholder.

Lenders may also require personal guarantees form the directors or shareholders and company debentures or other security from the company.

By selecting an adviser with experience in dealing with limited companies mortgages, landlords can ensure that their application is processed quickly and efficiently.

Synergy Financial for Further Help

With the help of Synergy Financial, you can access a variety of specialised lenders willing to provide loans for UK and Offshore limited companies.

Whether your company is a new SPV or an existing trading business, our experienced team has the resources and expertise to connect you with suitable options. And if your company operates offshore, we also have connections with lenders ready to offer loan services tailored specifically to your needs.

For more information on limited company mortgages and help with finding the right lenders, contact Synergy Financial today. Our team of expert advisers can provide you with the support and advice needed to make an informed decision about your financing options.

Limited Company Mortgages

Seeking Specialist Property Tax Advice

As mentioned above, transferring personal property to a limited company structure can have significant tax implications.

Therefore, it is essential to seek specialist advice from an accountant or tax advisor who can assess the individual’s financial position and advise on the most suitable course of action.

By taking advantage of the expertise of a qualified professional, landlords can ensure that they are making the most of their investment and minimising their tax liabilities.

Specialist tax advisors can provide tailored advice for landlords looking to use limited companies as part of their property portfolio.

They will have in-depth knowledge of the UK taxation system and are able to provide sound guidance on the most efficient way to manage your investments

For advice and assistance with transferring property into a limited company structure, contact Synergy Financial today. Our team of experts is here to help you make the most of your investments.

Final Thought

Limited company mortgages can provide significant financial benefits for landlords. With access to more generous lending terms from lenders and tax advantages that can assist in portfolio management, these mortgages can be an excellent option for those looking to take their property investments to the next level.

By seeking specialist advice from a tax advisor and a specialist buy-to-let mortgage adviser, landlords can ensure that they are taking advantage of the most efficient tax structures when using a limited company structure.

FAQs: Limited Company Mortgages

Most frequent questions and answers about Limited Company Mortgages

Yes, landlords can take advantage of tax benefits by transferring personal property into a limited company structure. However, it is essential to seek specialist advice from an accountant or tax advisor to ensure you make the most of your investments.

Yes, limited companies can get mortgages. Many banks and building societies offer tailored solutions for businesses and landlords looking to utilise a limited company structure as part of their property portfolio.

The amount of deposit required will depend on the lender and the type of property being purchased. When it comes to limited company buy-to-let mortgages, lenders commonly ask for a higher deposit than they do with standard residential mortgages, usually, at least 20-25% equity or deposit (sometimes even more). As a result, savvy investors who have lower loan-to-value ratios will possess more choices.

Yes, getting a mortgage as a limited company director with credit blips is possible. Lenders will require proof of income, and the best rate are for those with the best credit ratings. However, some competitive lenders will consider directors with credit blips, such as missed payments or CCJs. The more historic the credit blips are, the more competitive the rate can be. Discussing your circumstances with a specialist mortgage advisor before applying can help narrow down the best options

Limited company buy-to-let mortgages are classed as specialist buy-to-let mortgages and, therefore will have slightly higher rates than high street buy-to-let lenders. Specialist lenders used to charge higher interest rates and fees for limited company buy-to-let compared to other specialist buy-to-let products, but in the main, the rates and fees for limited company buy-to-let mortgages are now very similar to standard buy-to-let rates. Comparing mortgages from different lenders is essential to ensure you get the best possible deal. An experienced mortgage advisor can provide helpful advice on finding suitable finance options.

Synergy financial has access to various specialist buy-to-let lenders and are experienced in dealing with limited companies. Our experienced team can help you find the right lender for your needs.

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