Who Can Apply:

• Typically, these mortgages are for special purpose vehicles (SPVs), which are companies set up solely for buying and renting out properties.
• The directors or shareholders of the company usually provide personal guarantees, which means they are personally liable if the company cannot meet its mortgage payments.

Interest Rates and Terms:

• Interest rates for limited company mortgages are often higher than those for individual buy-to-let mortgages. This is because lenders view lending to a company as riskier than lending to an individual.
• The mortgage terms and conditions are similar to those of standard buy-to-let mortgages, including repayment terms, interest-only options, and the ability to remortgage.

Tax Efficiency:

• One of the main reasons investors use limited companies is to benefit from potential tax efficiencies. Profits within a company are subject to corporation tax, which is often lower than the higher personal income tax rates.
• Companies can also offset mortgage interest against rental income more effectively, which is less advantageous for individual landlords due to changes in tax laws.

Criteria and Eligibility:

• Lenders typically assess the mortgage application based on the company’s financial status, the directors’ personal financial situations, and the rental income potential of the property.
• The company usually needs to be an SPV, though some lenders may offer products to trading companies with property as part of their business activities.

• Pros and Cons of a Limited Mortgage:
  • Pros: Potential tax benefits, the ability to retain profits within the company for reinvestment, and a clearer separation between personal and business finances.
  • Cons: Higher interest rates, additional administrative costs, and the need to comply with more complex legal and financial regulations.