Limited Company Buy To Let

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What is a Limited Company Buy to Let Mortgage?

There are no specific Limited Company Buy to Let mortgages, yet there are lenders out there who tailor their mortgage products to be more attractive to Limited Company directors. Limited companies can benefit from a lower rate of corporation tax in contrast with income tax charged on income generated from the rental property – this makes them more attractive to lenders.

You need to make sure that you are ready to invest in a Buy to Let mortgage, there is a lot of commitment involved for instance fees and ensuring repayments are made with the rental property is vacant or rent is in shortfall. If you fail to keep up with repayments then your own home may be repossessed.

Why do people use a Limited Company for a Buy to Let Mortgage?

As already mentioned above, Limited companies tend to pay lower rates of corporation tax and can save in other areas of tax too, these significant tax savings tend to outweigh the expenses and fees. It is a very tax-efficient way to invest in property if you are Self-Employed.

The tax relief that Limited companies can benefit from makes it a very attractive route of investment. Limited companies do not have to pay income tax on rental income which makes it a very attractive option to invest through one. If your tenants fall behind with utility bills or council tax sometimes as a landlord, you can be held accountable and your credit can be affected; if you are a limited company investor then the company name is connected and not your own.

More and more lenders are beginning to become more flexible and open to Limited company Buy to Let property and mortgage deals. This is because of changes in Stamp Duty and the increase of Limited companies appearing on the property market ready to buy.

How is affordability calculated for a Limited Company Buy to Let limited mortgage?

You will need to ensure that you are on an income of at least £25,000 (some lenders have no minimum income, but these are limited) and you own your own residential property, if you do not fit these criteria you can face instant rejection. Most lenders will focus on both salary and dividends paid when it comes to assessing a Limited company’s income.

Company directors sometimes tend to retain profits within their businesses and some lenders will not take these figures into account during your affordability check. It can be worth getting in touch with an expert Mortgage Broker before declaring your income to ensure that you are getting the most out of your company.

Can you transfer a personal Buy to Let mortgage to a Limited Company one?

You can move your personal Buy to Let mortgage to be underneath your limited company, it is completely legal. The process can be somewhat expensive and you need to make sure that you have enough funds to back this transfer. It can be worth doing due to the long-term tax savings.

Can you set up a Limited Company with the sole purpose of investing in Buy to Let mortgages?

It can be worth setting up a Limited Company if you have multiple properties under your wing. If you already own Buy to Lets and transfer them to buy under a Limited Company then you can trigger a sale and repurchase, stamp duty, incurring capital gains tax plus valuation and mortgage fees.

The tax impactions can get complicated when it comes to Buy to Let mortgages no matter what route you are investing through. It is worth seeking the advice of a Mortgage Adviser to go through mortgage rates, interest rates, and the right options for your financial situation.

Why should Limited Companies speak to Mortgage Brokers before Investing in Buy to Lets?

Mortgage Brokers can help you when it comes to declaring your earnings and ensuring you get the most out of your income. Perhaps you have more retained profits than dividends to show to a lender and this may require a specialist.

Mortgage Brokers can advise you on the right options for your current circumstance and will be upfront about the cost that you will incur when investing. They can help you prepare all the documentation you will need alongside your mortgage application no matter what type of Self-Employed or Limited company you are.

We are Whole of Market Mortgage Advisers and have access to products not available on the high street and exclusive deals through our Network Quilter Financial Planning Ltd.

Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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