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Hello and welcome to today’s episode of the Mortgage Mum podcast. We’re covering a really hot topic right now – because the majority of landlords remortgaging a Buy to Let property are now doing it through a limited company.
We’re going to dive into that today. The lovely Tessa has been gathering your most Googled questions on this topic and will be asking the questions.
Yes – It’s important to caveat here that you need to have had a limited company for the original mortgage to do a remortgage. Otherwise, it’s more complex – because you and your limited company are two separate entities.
The limited company would already need to own the property to do a remortgage this way. Otherwise, you’re going to have to find a way for the limited company to take ownership – and we’ll do another episode on that, I’m sure.
Owning property through a limited company has become increasingly popular with landlords and property investors. There’s one main reason – tax.
It’s because of a big change in the mortgage market around five years ago, where tax relief on mortgage interest was stopped. It was whittled down over a five-year period and now there is no tax relief on mortgage interest.
You’re getting rent in and you’re paying your mortgage. When you do your tax return at the end of the year, you will pay tax on the whole rental amount, even though half of it or more has gone out on the mortgage payments.
That has hit landlords hard, as you can imagine, because they’re paying tax on income they don’t keep. However, in a limited company right now, you can deduct mortgage interest as a business expense.
So you’re going to save yourself tax on the money that goes straight out for your mortgage. The core benefit, tax-wise, is that you’re taxed on any profit at corporation tax rates instead of income tax. That can be a lot better for you. It’s typically lower than personal income tax rates if you’re a high earner.
Just to be clear, I’m not a tax advisor, but you will have had this advice if you’ve done your homework when you first bought the property through a limited company.
Lots of people do this because they want to scale. They want to hold multiple properties and this way it’s much easier to scale up a property portfolio. Lenders look at the company’s performance and rental income rather than your personal income. Lenders treat company clients differently.
Inheritance planning also comes into it, because it can be easier to pass on shares in a company than to transfer a property title directly, which is very useful when there’s multiple investors involved. If you’re thinking about doing a property portfolio with someone else, for example, it can be beneficial.
Having legal and financial separation between your personal and your business assets can also be useful. That may not be of importance to people, other than protecting your personal finances, but some like that separation. They see this as a business.
It differs because the company is the borrower, not you as an individual. However, as a director you might need to sign a personal guarantee. Some lenders do require that.
The mortgage is assessed through rental income. It can include company financials as well, potentially, or projected income, but it’s mainly based on the rent.
You really need to make sure the company is the right kind of Special Purpose Vehicle (SPV). It needs to be a company that is suitable for buying property. There needs to be a certain ‘SIC code’ – which is really important.
You need advice from us, at the same time as advice from a tax advisor and an accountant, to set this up properly. We will all make sure those boxes are ticked on the way through.
One thing we will confirm is that the company is structured in the right way and has the correct SIC code – typically 68209 or similar – which means it’s set up for property letting or for purchasing property.
It could potentially take longer to get all of the forms and documents from you, but otherwise, it’s broadly the same. It’s just different paperwork and underwriting in applying for the mortgage.
There’s probably a bit of extra due diligence – looking at your company documents, your shareholding and your company accounts. That can just take us more time – and the same for a lender.
The average is six to ten weeks – but of course, it varies. It really depends on how good your advisor is, how quick you are at responding and the lender’s turnaround times.
You’re going to need a mix of personal and company documents. We need company accounts or management accounts for trading companies. We’re going to want your business bank statements and sometimes your certificate of incorporation.
We need proof of ID and addresses for all directors and shareholders of the business. If you’re giving a guarantee, we need to see your personal income evidence. If you’ve got an existing mortgage, we like to see that to make sure it’s a seamless crossover.
If you’ve got rental properties, we might need your tenancy agreements to back up what you’re saying to the lender. We’ll also need to see your company structure – your shareholder percentages, SIC codes and your rental income on that property.
That’s obviously something that’s going to factor into the affordability, anyway.
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Yes, more and more are coming to the market. I’m meeting lenders at the moment who are working towards mortgages for limited companies. It used to be a specialist market primarily, but some high street banks are focusing on this now – they’re seeing the popularity.
They’re seeing how many people want to buy property this way and how useful or lucrative it is for them. There’s a real appetite for UK property right now for investors, particularly since the Trump tariffs as of Spring 2025.
That’s really making people think about buying property in the UK – they’re saying it’s a great, ring-fenced investment for people, especially from overseas. More lenders are wanting to get involved here.
The rates are often a bit higher on these mortgages. You can expect higher interest rates and higher arrangement fees than on personal Buy to Let products. That’s just due to there being more risk and complexity to the deal. It’s something to bear in mind.
You may still need to give a personal guarantee, which means you’ve still got that risk. If the mortgage doesn’t get paid it may still affect your personal situation as a director of the company. You gain some positives but still carry the negatives.
In terms of flexibility, accessing funds from the company is going to trigger tax, so it’s got to be structured correctly. There’s probably increased admin. You need the right advisors around you for your annual accounts, company records, tenancy agreements, accountancy fees… you’ve got to run this like a business. It’s not just a vehicle – it is a company you’re setting up.
Some people underestimate that. They might not have run a business before and they don’t do the things they need to in the background. Having a tax advisor, accountant and Buy to Let mortgage advisor – and investing in the team around you – will make sure you’re ticking all the boxes. That is critical.
In setting up any business, putting money in and borrowing on it is always going to carry risk. It’s just about weighing all that up.
As I’ve said, you’ve got to have an accountant and tax advisor – and they cost money. You’re typically going to have an arrangement fee as on a normal mortgage, and it might be a bit higher.
You’re going to have a valuation fee, depending on the property type. You’re going to have legal fees. There will usually be a broker fee on a limited company mortgage – not always, but generally as it’s a much more complex arrangement.
As always, you will have early repayment charges if you enter into a fixed rate. The costs are similar, but might be slightly higher.
You can, but your options will be more limited. The lenders will have to be happy. They will want to know how recent the credit issues were, the severity of them and whether this is personal or linked to the company. They will ask why it happened and if there is an impact on your affordability now. Could it happen again?
It also depends how much equity you’ve got. If you’re remortgaging and you’ve got a decent amount of equity, there might be fewer issues – as you’ve got less security risk for the lender. But they will still want to understand what’s happened.
That’s our job – to help explain. The more honest and open you can be with us, the better, because we can work with you and explain what that’s going to mean, if anything.
Perhaps you’re listening to this episode and you have a Buy to Let mortgage in your personal name. You’re wondering, do I move it to a limited company structure? And is that possible?
I just want to make it clear that you absolutely can transfer a property from your personal name to company ownership. You just need to get professional tax advice and understand stamp duty and capital gains tax implications.
You can do a legal transfer and, for some people, it makes sense. But you’re selling the property to your company. Remember that on a residential property, you are exempt from capital gains tax. But that won’t count in a company structure. You lose some of that personal tax allowance.
The tax advisor piece is the most important one. I want to get a tax advisor on the podcast so we can talk really openly about these things.
We see people do this and it can make sense. But other people don’t want to pay stamp duty on a property when they already own it. They just use a company structure for all their future properties. Just get advice, get advice, get advice – that’s the main lesson for this episode.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME.
YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU REMORTGAGE.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.
For specialist tax advice, please refer to an accountant or tax specialist.
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