A short guide to Limited Company Buy-to-Let Mortgages
Investing in property is an exciting journey, and choosing a limited company buy-to-let mortgage can be a smart move for certain landlords. Whether you’re a seasoned investor or just starting to build your portfolio, let’s break things down in a simple, friendly way.
Here are some friendly tips and advice to get you started.
What Is a Limited Company Buy-to-Let Mortgage?
A limited company buy-to-let mortgage is designed for landlords purchasing rental properties through a company, rather than as an individual. This option can come with tax advantages, especially since corporation tax rates are often lower than personal income tax rates.
Always get professional advice from an accountant to help decide if they are right for you.
Why Go Through a Limited Company?
Here are some reasons why landlords often prefer the limited company route:
Tax Efficiency: Mortgage interest relief has been reduced for individuals but remains available for limited companies.
Future-Proofing: It can be easier to transfer property ownership (ie. family members) through shares in a company, rather than as an individual asset.
Profit Flexibility: You can leave profits in the company to reinvest, or pay yourself in a way that suits your financial goals.
What to Expect from Lenders
When applying for a limited company mortgage, lenders assess both the company and the directors and shareholders. They will also look closely at…..
The Company Type: Most lenders prefer Special Purpose Vehicles (SPVs) set up for property letting. Always check your new company has the correct SIC code, this is usually 68100 or 68209 *Always check this.
Personal Guarantees: Directors often need to provide personal guarantees for the loan.
Extra Costs: Interest rates and fees can be higher than standard buy-to-let mortgages, but the long-term tax benefits often outweigh these.
So you still think you’re reading to talk it through ??
Don’t hesitate to reach out, sometimes all you need is a chat to get started! Plus I will answer all your questions, no matter how big or small!
