Best Limited Company Buy-to-Let Mortgages

Learn all about the best-limited company buy-to-let mortgages on the buy-to-let market.

Updated: May 21, 2024
Matt Crabtree

Written By

Matt Crabtree

|
Rebecca Goodman

Edited By

Rebecca Goodman

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Are you looking to expand your property portfolio and invest in the housing market? Limited company mortgages are often cheaper to own than regular buy-to-let properties as there are additional benefits to getting a mortgage as a limited company, such as reduced tax.

In this article, you'll learn all about limited company buy-to-let mortgages, and we'll introduce you to the best ones on the buy-to-let market.

ProviderScoreDetails
1. Aldermore★★★★★Click Here
2. The Mortgage Works★★★★★Click Here
3. LendInvest★★★★Click Here
4. Molo Finance★★★★Click Here
5. Saffron Building Society★★★★Click Here
6. Paragon Bank★★★★Click Here
7. Monmouthshire Building Society★★★★★Click Here
8. Bath Building Society★★★★★Click Here

What is a limited company buy-to-let mortgage?

A limited company buy-to-let mortgage is a mortgage that's aimed at limited companies rather than independent landlords. It's one way of getting a mortgage through your limited company, and not in your own name.

You need a Special Purpose Vehicle (SPV) to manage your residential rental portfolio to get a buy-to-let mortgage.

Your company has to be set up solely for property investments, including buying, letting and selling. Guarantors of the SPV will need to provide personal guarantees on the loan repayments.

Your business must be a limited (LTD) company registered with Companies House to apply for limited company mortgages. You must choose the correct SIC codes for your business activity, which you can do when setting up a Ltd company. You can include up to four SIC codes on your SPV.

There are several SIC codes related to property letting, such as:

  • 68209: Other letting and operating of own or leased real estate.
  • 68100: Buying and selling of own real estate
  • 68201: Renting and operating of Housing Association real estate. Housing associations provide social housing and support vulnerable members of society.
  • 68320: Management of real estate on a fee or contract basis.
  • 41100: Property development for businesses who work in the development of building projects.
  • 68310: Real estate agencies, so if you do property sourcing, deal sourcing and acting as an agent.

When you manage properties through a limited company, you can reduce the tax burden on your business as you will pay corporation tax rather than income tax on your rental income. However, you must continue paying income tax on your other personal income.

Limited companies have to pay stamp duty, but it is at the same rate as an individual for non-residential property. You are entitled to tax relief of 20% of mortgage interest payments yearly if they exceed £9,000.

The Financial Conduct Authority does not regulate buy-to-let mortgages, including traditional and limited company buy-to-let mortgages.

How can you get a limited company buy-to-let mortgage?

The criteria varies between limited company loan providers, depending on what loans they offer and rates.

However, there are standard criteria that most mortgage lenders follow, such as:

  • SIC codes: Limited companies or SPVs must be set up under a SIC code concerning their industry.
  • Minimum deposit: Most lenders expect you to put down a 20-25% minimum deposit, 25% of the property value. Depending on your financial circumstances, you could have to pay a higher or lower deposit.
  • Creditworthiness: The better credit history you and the other company directors have, the more likely you are to be accepted for a limited company loan.
  • Property-related criteria: Not all mortgage lenders support all types of buy-to-let property, for example, houses of multiple occupancy (HMOs).
  • Rental income: For most buy-to-let mortgage lenders, rental income must equal 125% of the mortgage repayments.

The pros and cons of limited company BTL mortgages

Before introducing you to the best limited company mortgages, we'll explore all the pros and cons to help you determine if this is the right decision.

Pros

✔️ Lower tax: You will pay less tax when you take out a limited company buy-to-let mortgage. You will only pay corporation tax instead of income tax. Corporation tax is set at a lower rate than income tax, so you could save money by being more tax efficient, especially if you fall into the additional or high-rate income tax bracket.

✔️ Grow property portfolio: When growing your investment portfolio with property investment, you can use retaining your profits within the company to fund future purchases without worrying about income tax, so you can continue to expand your portfolio.

 ✔️ Legacy planning: If you plan to pass your business on to your family in the future, and the property is held within the company, your family won’t have to pay stamp duty, inheritance tax, or capital gains tax liability.

✔️ Section 24 doesn't apply: Limited companies can offset 100% of the mortgage interest to reduce profits and the amount of tax paid.

Cons

❌️ Less choice: Not all buy-to-let lenders provide limited company buy-to-let mortgages, so your choice of properties may be limited.

❌️ Legal responsibilities: You must keep accurate business financial records and submit reports and documents to HMRC and Companies House. There are additional legal and financial responsibilities with limited company mortgages compared to normal ones.

❌️ No capital gains allowance: If you decide to resell the property or mortgage, you will be personally liable for Capital Gains Tax.

❌️ Double taxation: If you wish to take profits out via a salary or dividends, you will need to pay income tax, so you potentially risk paying both corporation and income tax. So, the best way to prevent this is to reinvest the profits into business.

Best buy-to-let mortgages for limited companies

You may need to contact a mortgage broker to apply for a limited company buy-to-let mortgage. It will be able to offer advice and show you potential mortgages you can apply for. However, you may have to pay for the service.

This best list is to demonstrate the limited company mortgage options available.

1. Aldermore Limited Company Buy-to-Let Mortgages

  • Mortgage interest rates: 4.99%
  • Mortgage type: Fixed
  • Period: Five years
  • Max LTV: 75%

Both Trading Companies and SPVs can apply for buy-to-let mortgages with Aldermore.

Aldermore specialises in buy-to-let mortgages for limited companies and portfolio landlord lending. Human underwriters assess every application and always look for ways to change. You can receive expert support for managing and growing portfolios.

Aldermore doesn't set exposure limits on background portfolio limits or blocks of flats and allows top slicing on a wide range of incomes. There are no income restrictions for an experienced landlord with a minimum of six months' letting history, so if you're already a property investor, this limited mortgage may work out in your favour.

If you wish to repay, you won't have to worry about early repayment charges, as Aldermore allows overpayments of up to 10% of the outstanding mortgage balance each year without charges.

2. The Mortgage Works Limited Company Mortgages

  • Mortgage interest rate: 5.49%
  • Mortgage type: Fixed
  • Period: Two to five years
  • Max LTV: up to 80%

The Mortgage Works is a specialist mortgage broker lender of Nationwide Building Society specialising in buy-to-let mortgage finance.

The Mortgage Works offers limited company mortgages to first-time, experienced and portfolio landlords. You can choose between 1, 2 or 5-year product terms, and you'll need a minimum deposit of 25%.

However, if the property has an Energy Performance Certificate rating of C or above, you'll need a minimum deposit of 20%. There is a 130% Interest Cover Ratio(ICR) for buy-to-let (175% for HMOs).

For the mortgage application to be successful, your limited company must specialise in buying, letting and selling property. Your company must be registered in England, Wales, or Scotland and match Companies House records. You can only have two directors or shareholders and own 100% shareholding in the limited company.

The Mortgage Works has various calculators you can use to help determine if they have the right mortgage for you, such as the how much can be borrowed calculator, the rental income required calculator, the mortgage payment calculator, rental yield calculator, portfolio checker and further advance calculator.

3. LendInvest Buy-to-Let Mortgages

  • Mortgage interest rate: 3.99%
  • Mortgage type: Fixed
  • Period: Seven to 30 years
  • Max LTV: 75%

If you're looking for a long-term length, we recommend LendInvest.

You can have a mortgage term for up to 30 years and benefit from 3.99% rates for two years. If you're an experienced landlord in England, Wales, or Scotland, then Lendinvest may be ideal.

The key features we found most helpful with LendInvest's buy-to-let property mortgages were the Free Title Insurance on the standard property and small House in Multiple Occupation remortgage cases, flexible underwriting for portfolio landlords, a user-friendly online broker portal, and the use of Open Banking.

There is a mortgage calculator on their website, and we found this helpful in determining mortgage rates, fees, and payments before filling out a mortgage application. It's a great way to determine affordability and compare against other limited-company mortgages more easily.

4. Molo Finance Limited Company Mortgages

  • Mortgage interest rate: 4.65%
  • Mortgage type: Fixed
  • Period: Two to five years
  • Max LTV: 75% or 80%

There is a variety of limited company mortgages to explore with Molo Finance.

You can check your eligibility and find it suited to your financial situation. You can only apply for a limited company mortgage with Molo Finance if you're an SPV limited company, have one of the following SIC codes 64305, 64910, 68100, 68209, 68310, 68320, and only have a maximum of four directors or shareholders.

Molo Finance will show you what limited company mortgages they have available with all the mortgage rates so you can see what's on offer before making contact. You can complete the advanced search to narrow down results and find your ideal mortgage. You can include property type, landlord type, property tenancy, how much deposit you have, and property worth.

Their website has two helpful calculators: the mortgage calculator and the rental income calculator. It is excellent if you want to work out the affordability of the limited mortgages on offer. You can determine how much they will lend you by entering your annual income, monthly outgoings, property value and expected monthly rent.

5. Saffron Building Society Limited Company Buy-to-Let Mortgages

  • Mortgage interest rate: 6.09% for two years, then 8.79%
  • Mortgage type: Discounted variable
  • Period: Two to five years
  • Max LTV: 75%

If you're a first-time buyer or first-time landlord, you can apply for a limited company buy-to-let mortgage with Saffron Building Society if you've got a Limited Company registered in the UK.

Saffron Building Society specialises in buy-to-let mortgages and property development finance with branches around the UK. Saffron BS has an extensive criteria list for limited company mortgages. Regulated or Consumer buy-to-let is not accepted.

Your company must be set up with the principal activity of buying and holding resident investment property and used to align with the appropriate SIC code. The maximum loan size is £3,000,000; anything over will be on a bespoke contract basis and have restricted LTVs.

A great feature we liked from Saffron is that they offer a Financial Wellbeing Review that you book to discuss your options and make the most of your money. The review is an excellent way to show support for customers.

6. Paragon Bank Limited Company Lending

  • Mortgage interest rate: 9.60%
  • Mortgage type: Variable
  • Period: Five years
  • Max LTV: 80%

If you're undecided about whether you want a mortgage as a limited company or an individual landlord, Paragon Bank offers the same products for both, so you don't have to miss out.

Day one limited company can apply for a limited company buy-to-let mortgage and SPV limited companies, including subsidiaries.

Companies must not have any trading activity other than buy-to-let. For a standalone SPV limited company, at least 80% of the shares must be owned in the director's name, and a personal guarantee is required from all.

Paragon allows you to search for specific products with an enhanced product search option that can tailor results to what you're looking for, so you don't have to scroll endlessly to find an ideal property investment.

Paragon Bank specialises in limited company lending and has other valuable products such as savings accounts, Cash ISAs, finance tools and other lending and a help centre should you need it.

7. Monmouthshire Building Society Limited Company Mortgages

  • The mortgage interest rate: 5.50% for the first two years, then 8.5%
  • Mortgage type: Discounted variable
  • Period: From two years
  • Max LTV: 75%

For the first two years of your limited company mortgage with Monmouthshire Building Society, you can benefit from a mortgage rate of 5.50%.

After this time, it will increase to 8.5%. The interest is variable for up to two years but will not exceed the floor rate of 3.50%. The mortgage interest is calculated daily.

The minimum loan size is £40,000, and the maximum loan for a single property is £1,000,000. There is an option of £3,000,000 aggregate lending over a maximum of 3 properties.

There is an early repayment charge for any amounts paid above 10% for the first two years of the loan. After the two years, there are no early repayment charges. You can use the mortgage calculator on the website to determine how much you can borrow and how much the mortgage will cost you.

Monmouthshire Building Society also has savings products for personal and business use and provides financial support and advice for all customers.

8. Bath Building Society Limited Company Buy-to-Let Mortgages

  • Mortgage interest rate: 6.74%
  • Mortgage type: Fixed
  • Period: Five years
  • Max LTV: 80%

If you're looking for your first investment property or adding to your portfolio, Bath Building Society offers buy-to-let and limited company buy-to-let mortgage products.

You can choose between a fixed and variable mortgage, but there is a limit on how low interest can fall. You can make overpayments up to 20% of the capital balance a year without a penalty charge.

You can determine your mortgage before you apply with the affordability calculator to help you work out the maximum loan you can borrow using a five-year fixed rate to calculate the highest mortgage possible.

With the monthly payments calculator, you can predict your monthly payments based on the mortgage product, the type and the term of your borrowing. These calculators make comparing limited company mortgages easier, as you can determine how much it will cost without filling out an application.

Bath Building Society also offers products for savings, intermediaries, business, charity and trust accounts, and a wide range of other mortgages.

The verdict

If you're a business owner or a partner in a limited company, you could benefit from a limited company mortgage to expand your portfolio with a buy-to-let property.

You will pay less tax than if you were a landlord buying a standard buy-to-let mortgage although there are negatives to weigh up before you decide. If you need more guidance, talk with a mortgage broker; they can advise you if this is the right decision.

Related guides:

FAQs

Can I Use My Limited Company to Get a Mortgage?

Are Mortgage Rates Higher for Limited Companies?

How Much Is a Deposit for a Limited Company Buy-to-Let Mortgage?

How Much Mortgage Can I Get as a Limited Company?

What Taxes Do You Pay With a Limited Company Buy-to-Let Mortgage?

Do You Pay Less Tax With a Limited Company Buy-to-Let Mortgage?

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