How Does Buy-to-Let with a Limited Company Work?

Quick Links

Introduction

Setting Up a Limited Company for Buy-to-Let

Benefits and Considerations

Buy-to-Let Mortgages for Limited Companies

Is It Right for You?

Opting to manage a buy-to-let investment through a limited company has become a popular strategy for property investors.

This method can potentially offer tax advantages and increase flexibility when expanding a property portfolio, though it also comes with additional responsibilities.

Understanding how buy-to-let mortgages work in this context is key to making an informed decision.

Setting Up a Limited Company for Buy-to-Let

To begin, you’ll need to establish a limited company if you don’t already have one in place. Many investors choose a Special Purpose Vehicle (SPV), a company specifically created for property investment.

Lenders often prefer SPVs for buy-to-let mortgages, as they are straightforward to assess. If your company engages in other business activities, you might find fewer lenders willing to approve your application.

Mortgage lenders for limited companies will review similar criteria to personal buy-to-let applications, including rental income, property value, and the creditworthiness of directors.

This process is particularly important when exploring products such as buy-to-let remortgages to expand or refinance your property portfolio.

Speak to an Advisor – It’s Free!

Schedule a free callback from one of our experts today.

• All situations considered
• Transparent and honest mortgage advice
• We search 1000s of purchase and remortgage deals

Get Started

Our customers rate us 4.9/5

Benefits and Considerations

One of the main attractions of using a limited company for buy-to-let investments is how rental income and tax liabilities are treated.

Unlike personal ownership, where rental income is taxed at personal income tax rates, companies pay corporation tax on profits. This can result in significant savings for higher-rate taxpayers.

Additionally, limited companies can retain profits, allowing reinvestment into further properties without triggering personal income tax.

Lenders offering portfolio landlord mortgages often accommodate limited company applicants.

These products are designed for landlords managing multiple properties, enabling streamlined management of diverse investments.

When managing multiple properties, structuring ownership through a company can simplify tax planning and portfolio growth.

Buy-to-Let Mortgages for Limited Companies

The mortgage process for a limited company is similar to traditional buy-to-let, with some variations. Interest rates may be higher, reflecting the perceived risk lenders associate with corporate borrowing.

Some lenders also charge higher arrangement fees for limited company applications. Nonetheless, the right mortgage broker can help you navigate the options, ensuring you secure a deal suited to your goals.

When switching from personal ownership to a company setup, bridging loans may be worth exploring.

These short-term financing solutions allow investors to purchase or refinance properties while arranging a long-term buy-to-let mortgage.

Similarly, landlords transitioning their existing portfolio may benefit from a switch to buy-to-let mortgage, enabling them to align their financing structure with their investment strategy.

Trusted Buy to Let
Mortgage Advice

Read Our Reviews

Is It Right for You?

Investing through a limited company isn’t without its challenges. While tax savings can be appealing, costs such as corporation tax filing and legal fees should be factored in.

Limited companies may also be subject to different lending criteria, impacting your choice of lenders and the terms available.

Seeking advice from a specialist mortgage broker ensures you’ll access lenders experienced in limited company buy-to-let mortgages.

Whether you’re purchasing a single property or managing a diverse portfolio, this approach offers flexibility for long-term property investment.

By working with professionals familiar with products like buy-to-let remortgages, holiday let mortgages, and portfolio landlord mortgages, you can develop a tailored strategy to achieve your goals.