FAQ: Limited company buy to let mortgage Frequently Asked Questions
How do Limited Company Buy to Let Mortgages Work?
Generally speaking, a buy to let mortgage for a company works in the same way as personal mortgage, however they are designed for use by limited companies and the title of the property being purchased will be registered in the name of the limited company.
An SPV limited company that is set up solely for the purchase of property is the preferred purchase vehicle for buy to let mortgage lenders, although some of our lending partners will accept applications from trading companies in certain circumstances.
What is an SPV Limited Company?
SPV stands for Special Purpose Vehicle. A special purpose vehicle (SPV) is simply a regular limited company which is used solely for a particular purpose. In the case of property investment, it's used for buying, selling, renting and the management of properties.
An SPV limited company gives buy to let mortgage lenders an assurance that the company is legally entitled to buy, sell, rent and manage property and that any funding provided will be used specifically for the purchase of property.
Is there any benefits with a Limited Company Mortgage?
The main financial benefit of owning rental properties through a limited company is that you get full tax relief on the mortgage interest and any mortgage arrangement fees.
The majority of buy to let mortgages are taken on an interest only basis and limited companies that own buy to let property will only pay tax on the profit, not on the full rental income, plus subject to your personal tax status corporation tax may well be be lower than your personal tax rate.
Individuals who own buy to let property will pay tax at their personal tax rate on the full rental income and not on the profit with no allowance for mortgage interest and mortgage arrangement fees.
Will I be able to get a Limited Company Mortgage?
Yes, buy to let mortgages are readily available for SPV limited companies that are registered in the United Kingdom and are specifically set up for the for the purpose of buying, selling, renting and managing property.
Affordability criteria is primarily based on the rental income from the rental property.
How do I Apply for a Limited Company Mortgage?
Most mortgage lenders that provide buy to let mortgages for companies generally require applicants to submit their applications through an experienced broker who can help guide them through the process.
