Specialist Limited Company Mortgages

What is a Specialist Limited Company Mortgage?

Mortgages for limited companies are typically only eligible for Special Purpose Vehicles, a specialist limited company that has the sole purpose of property investment; whether it be buying, selling or letting a property.

Many landlords now keep their buy to let property portfolio under a limited company as a result of changes to UK tax laws, as this allows a more tax-efficient approach and enables the landlord to leverage further borrowing against the existing portfolio.

For higher rate taxpayers, the tax savings can be significant. Landlords are also able to reduce their financial risk as personal liability is separate from the limited company. However, most lenders will require personal guarantees from the directors.

This guide refers to purchasing a property with a limited company. For directors seeking to purchase a property as an individual, please read this separate guide on mortgages for directors. 

What are the key features of limited company mortgages?

• The mortgages will fall into the 75% - 85% Loan to Value (LTV) range
• Rental income must meet at least 125% of the mortgage repayments
• Personal gifted deposits are allowed, but not gifts to the company

​​​​​​​Frequently Asked Questions

How do you set up a new limited company mortgage?

It is possible for new limited companies to secure a mortgage, especially if the companies are purely for property investment. If the limited company is new, then registering as a Special Purpose Vehicle can help to speed up and make the mortgage process easier. 

Mortgage affordability is often assessed on the potential rental income that the property might generate, typically requiring at least 125% of the mortgage repayment to be considered a viable proposition. 

Can a limited company get a mortgage even if it isn’t an SPV?

Non-SPV new limited companies are deemed very high risk by lenders. The company has no track record, so the lender has little to base a decision on trustworthiness on. Additionally, new limited companies will not have any credit, another red flag for lenders.

However, there are solutions, usually involving personal guarantees from directors which act as the safety net for the lender. Further securities can also be offered by shareholders such as larger deposits or providing access to assets, such as properties with equity.

What are the benefits of special limited company mortgages?

• More tax efficient, especially for higher rate taxpayers
• Limited liability for the company directors
• Can help directors when taking out a personal mortgage

Are there any associated pitfalls?

• The fees and rates are typically higher than usual buy to let mortgages
• Extra administrative duties and obligations for limited companies
• Greater complexity of application

Please note: Some forms of BTL Mortgages are not regulated by the FCA

Ready to discuss a Specialist Limited Company Mortgage?

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Our expert team is on hand to offer professional and tailored advice to ensure that you make the best decisions regarding your finances. We are not tied to any specific lender so we can make sure that we help you to select the right mortgage. Call us for an initial, free of charge consultation.  There is no obligation to use our services and you can meet in one of our offices in Horsham and Southwater, or arrange a phone based appointment.

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