How to effectively compare limited company buy-to-let mortgages

Buy-to-let properties owned by limited companies are on the rise, with 7 out of 10 buy-to-let acquisitions in the UK now made through a company, leaving only 3 in 10 purchased by an individual private owner. 

With property purchases, come mortgages. 

If you’re considering setting up a limited company to manage your buy-to-let portfolio, or, if you already own a company and are looking to purchase some buy-to-let properties, you’re likely in the market for a mortgage. So, how do you find, compare, and secure limited company buy-to-let mortgages? 

What is a buy-to-let mortgage for limited companies? 

A buy-to-let mortgage through a limited company is a form of funding that is used to purchase, renovate, build, or refinance a property that will be rented out to tenants, rather than lived or worked in. Essentially, you borrow money as a business (rather than as an individual investor) which is used to invest in a property and (hopefully!) generate rental income. 

Buy-to-let limited company mortgages generally require larger deposits than standard commercial mortgages, semi-residential mortgages, or personal property loans, and they often have higher interest rates too. Think: a 25% deposit, rather than a 10% deposit. 

The debt and the property itself are held in the company name, rather than in your name, making your personal liability limited, but not non-existent. Some limited company mortgages require personal guarantees, which means you’re still liable to pay the loan even if your business closes down. Similarly, if fraud occurs, you will likely be held liable even though the property is in the company name. 

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How to find limited company buy-to-let mortgages

Often, the easiest, most efficient way to find a buy-to-let limited company mortgage is through a broker. Brokers, like Funding Options by Tide, often don’t charge anything upfront, can sometimes check your eligibility without impacting your credit score, and could save you countless hours spent scrolling through search results for property finance. Ultimately, this all serves to help you find the most favourable interest rates and terms. 

Get a quote with a broker here.

Alternatively, you could find a limited company buy-to-let mortgage by checking with your local brick and mortar financial institution, asking your current banking provider (who may be able to provide you with a special offer as you are already in business with them), and searching for relevant lenders online. Remember, with this last option, you’re looking for a bank or lending institution that offers buy-to-let mortgages that are also commercial mortgages, as some lenders offer funding to individuals but have different rules for businesses. 

👉  Wondering how big a deposit you need? Learn more about how much of a deposit you need for a commercial mortgage. 

How to effectively compare limited company buy-to-let mortgages 

Finding a favourable mortgage can spell the difference between a successful venture and one that never gets off the ground. Here are some ways to effectively compare mortgage options.

Get a wide pool of options 

The more options you start with, the better informed your comparison. How many options you can get may depend on your eligibility, but where possible (if not through a full application, through an initial enquiry) try to find out what a range of lenders are offering by way of fee structure, loan amounts, interest rates, and mortgage terms. This will give you a solid benchmark to inform your comparison. 

Look for red flags 

The first port of call when narrowing down your lender selection is to look for red flags. Check their online reviews (search: lender name followed by terms such as scam, bad, negative), find out if the lender is regulated by the FCA, and ask for feedback from anyone you may know who currently borrows from this lender. 

Then, look at their fee structure and terms and conditions. Are they easy to understand? If not, are you able to ask for and gain clarity on any items that may not make sense to you? Lenders have a responsibility to ensure their borrowers understand what they’re getting into, if you feel confused, that could be a red flag. 

Compare interest rates and fees 

Compare the interest rates, fees, and additional payments offered by all the lenders you’re in communication with. Does one charge especially high early repayment rates or a larger than average administrative fee for setting up the mortgage? Are the interest rates variable or fixed? How much are the arrangement fees coming to? Consider your needs when it comes to interest rates and fees and decide which lender is more suited to you. 

Consider what you can do first 

If you have a little time, it may be worth considering what your business can do to improve the terms and rates you receive before hitting apply. For instance, it’s possible that you could improve your company credit score in the time before your application is submitted. Try doing this by paying off any outstanding debt, reducing your debt utilisation, and getting on top of any missed payments. This could help you gain a better interest rate offering. 

Similarly, if possible, consider gathering together a larger deposit. Aiming to put forward more than the standard 25% could help you gain better offerings, perhaps from lenders who may have been previously closed to you. If there’s some flexibility around the property itself, finding a high yield low risk property could also help open up your mortgage options. 

👉  Find out if commercial mortgages are regulated by the FCA here.  

Find a limited company buy-to-let mortgage with Funding Options by Tide

We help eligible businesses find, apply for, and secure funding from our network of over 120 lenders offering up to £20M. Want to find out if you’re eligible for a buy-to-let mortgage as a limited company? Just click the link below and submit your information and we’ll be in touch shortly. 

Find a buy-to-let limited company mortgage.

Please note that the information above is not intended to be financial advice. You should seek independent financial advice before making any decisions about your financial future.

It’s important to remember that all loans and credit agreements come with risks. These risks include non-payment and late-payment of the agreed repayment plan, which could affect your business credit score and impact your ability to find future funding. Always read the terms and conditions of every loan or credit agreement before you proceed. Contact us for support if you ever face difficulties making your repayments.

Funding Options, now part of Tide, helps UK firms access business finance, working directly with businesses and their trusted advisors. Funding Options are a credit broker and do not provide loans directly. All finance and quotes are subject to status and income. Applicants must be aged 18 and over and terms and conditions apply. Guarantees and Indemnities may be required. Funding Options can introduce applicants to a number of providers based on the applicants' circumstances and creditworthiness. Funding Options will receive a commission or finder’s fee for effecting such finance introductions.