Table of Contents
1. Introduction
2. What is a Ltd company mortgage?
3. Why Consider a Limited company mortgage?
4. Benefits of Using a Limited Company for Property Purchases
5. Is a Ltd company mortgage More Expensive?
6. How Self Certified Mortgages Compare
7. Key Considerations Before Applying
8. How EHF Mortgages Can Help
Introduction
When it comes to property investment strategies, more people are considering a Ltd company mortgage to maximise returns and streamline tax efficiencies. According to the UK Land Registry, limited companies now account for over 40% of new buy-to-let mortgage applications (Land Registry), highlighting a significant shift in the market. If you’re thinking about expanding your portfolio or starting fresh with property investment, it may be time to explore the possibilities a Ltd company mortgage offers.
What is a Ltd company mortgage?
A Ltd company mortgage is a specialist mortgage product that enables a limited company to borrow funds to purchase property, typically for buy-to-let purposes. Instead of being in an individual’s name, the mortgage and property title are owned by the limited company, often an SPV (Special Purpose Vehicle) specifically set up for property investment. This structure allows landlords and investors to separate personal and business finances, offering potential tax advantages.
Why Consider a Limited company mortgage?
There are several compelling reasons to explore a Limited company mortgage. Firstly, changes in tax legislation, particularly the phased removal of mortgage interest tax relief for private landlords, have made operating through a company more attractive. Company profits are subject to Corporation Tax, which is currently lower than higher rates of personal income tax (GOV.UK Corporation Tax Rates). Additionally, a limited company structure can simplify passing properties on to family members and facilitate reinvestment without personal tax penalties.
Benefits of Using a Limited Company for Property Purchases
One of the greatest advantages of using a limited company to purchase property is the potential for increased tax efficiency. Mortgage interest can often be deducted as a business expense, reducing taxable profits. Furthermore, you have greater flexibility when it comes to drawing dividends, reinvesting earnings, and succession planning. Some investors also prefer the corporate image and protection a limited company structure provides. However, it’s worth noting that running a company comes with administrative responsibilities and associated costs.
Is a Ltd company mortgage More Expensive?
In general, a Ltd company mortgage tends to have slightly higher interest rates and fees compared to standard individual buy-to-let products. This reflects the perceived increased risk by lenders and the specialist underwriting required. You may also face additional requirements, such as director guarantees. That said, the long-term tax savings and operational flexibility often outweigh these initial extra costs. It’s crucial to work with a broker who can access the full market, including specialist lenders offering competitive limited company mortgage rates (Moneyfacts Limited Company Mortgages).
How Self Certified Mortgages Compare
In the past, self certified mortgages were a route for borrowers with complex incomes, including company directors and self-employed individuals, to secure loans without traditional proof of income. However, following regulatory changes, self certification mortgages were banned in the UK by the FCA in 2014. Some overseas lenders still offer similar products, but they come with greater risk and higher rates. Unlike self certified mortgages, a Ltd company mortgage demands full disclosure of company financials and director status, ensuring greater transparency and financial stability.
Key Considerations Before Applying
Before applying for a Ltd company mortgage, it’s important to understand a few essentials:
Future Plans: Consider whether you may wish to transfer existing properties into a limited company, as this could trigger stamp duty and capital gains tax charges. Working with a specialist mortgage broker, like EHF Mortgages, ensures you understand the full implications and benefits specific to your situation.
Company Structure: Most lenders prefer an SPV limited company with SIC codes related to property investment or letting.
Deposit Requirements: Typically, you will need a deposit of at least 25%.
Director Guarantees: Many lenders require personal guarantees from company directors.
Accounting Costs: Running a company will involve accounting and filing obligations.
How EHF Mortgages Can Help
At EHF Mortgages, we specialise in sourcing the best Ltd company mortgage deals tailored to your needs. Whether you’re setting up a new property SPV or already have an established limited company, our team will guide you through the application process, explain the pros and cons, and connect you with lenders offering the most competitive terms. We also offer guidance on associated protection products, such as relevant life insurance and income protection, providing holistic financial security.
We are proud to offer independent, whole-of-market advice, helping property investors across Essex, East Anglia, London, and the wider UK access flexible, tailored solutions. Whether you’re buying your first investment property through a limited company or expanding an existing portfolio of Buy to Let, EHF Mortgages is here to support your success every step of the way.
Ready to explore your options? Contact EHF Mortgages today to arrange your free consultation and find out how a Ltd company mortgage could work for you!
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