Buying a property through a limited company is possible, and can be done in many ways.
Whether you want to buy through an existing trading limited company or a special purpose vehicle (SPV), our specialist advisers can provide guidance on which is best for your circumstances.
What is an SPV?
A Special Purpose Vehicle (SPV) is a limited company that can be classed in different ways by lenders, because they only trade in rental property. This means that they can access exclusive SPV mortgage products.
Existing Ltd companies
If you are the owner of an existing limited company, then purchasing a property or refinancing one through it can be difficult, simply because most lenders will only look at companies that deal purely in property. There are, however, lenders that consider companies trading in other areas.
If you are not an SPV, there are still lenders out there who will consider your application, but you will usually need a 25% deposit due to the restricted number of lenders.
New Ltd companies
If you are looking to set up a new limited company to obtain a buy-to-let mortgage, then ideally it would be set up as an SPV because of the exclusive products available to them.
However, this is not essential.
Lenders will look at the credit score of the sole director of the business, or at least two of the directors if it is owned by more. This is because the business will have no credit history of its own.
Why arrange a mortgage this way?
The main reason people buy property through a limited company is for tax relief.
Paying tax on a property through a limited company will be lower than the tax on individual income.
There is also no tax on dividends of under £5,000 or on any retained profit, allowing for reinvestment. Corporation tax is still applicable, but it is lower than the higher income tax rate.
To find out how you could get a buy-to-let mortgage through your Ltd company, speak to one of our expert advisers who will be able to help you with the next steps.