Key facts
- Primary keyword: limited company mortgage - 1,300 monthly searches
- Independent editorial guide - no affiliate links, no commission
- Sources: FCA, gov.uk, HMRC, Money and Pensions Service
- Last reviewed June 2026 by Chandraketu Tripathi, Finance Editor
What Is a Limited Company Mortgage?
A limited company mortgage, often called an SPV (special purpose vehicle) mortgage, is a buy-to-let mortgage where the borrowing and property ownership are held within a limited company rather than in the individual landlord's name. A limited company mortgage is the structure most commonly used by higher-rate taxpayer landlords to mitigate the impact of Section 24 mortgage interest tax relief restrictions.
For a limited company mortgage, the company - typically an SPV set up specifically to hold property - applies for the mortgage and owns the property. The director(s) of the limited company provide personal guarantees to the lender as security. The limited company mortgage market has grown substantially since 2017 as more landlords restructured their holdings.
A limited company mortgage involves more complexity and cost than a personal buy-to-let mortgage. Limited company mortgage rates are typically slightly higher, arrangement fees are more common, and ongoing administration costs are greater. However, the corporation tax treatment of mortgage interest may produce a better post-tax outcome for higher-rate taxpayers.
Limited Company Mortgage Tax Advantages
The primary tax advantage of a limited company mortgage is that mortgage interest is treated as a business expense and deducted before calculating corporation tax. For a limited company mortgage, all mortgage interest reduces the taxable profit of the company, not just the basic-rate equivalent.
In contrast, individuals holding buy-to-let properties personally only receive basic-rate tax relief on mortgage interest under Section 24 restrictions. A 40 percent taxpayer holding a property personally receives 20 percent relief on mortgage interest; the same landlord holding via a limited company mortgage deducts the full interest cost at the corporation tax rate of 25 percent for profits above 250,000 pounds.
A limited company mortgage also allows the landlord to retain profits within the company rather than withdrawing them immediately, deferring income tax until extraction. This retained profit strategy, combined with the limited company mortgage structure, can significantly improve after-tax returns compared with personal ownership.
Limited Company Mortgage Rates and Costs
Limited company mortgage rates are typically 0.1 to 0.5 percentage points higher than equivalent personal buy-to-let mortgage rates from the same lender. The premium reflects the additional complexity and risk assessment involved in a limited company mortgage application.
Arrangement fees are more common on limited company mortgage products than personal buy-to-let products. Legal fees are also higher because both the company and the personal guarantors must be represented in the limited company mortgage documentation.
Additional ongoing costs for a limited company mortgage include: annual company accounts and Corporation Tax returns (typically 500 to 1,500 pounds per year); company secretarial compliance; and potentially payroll if the director takes a salary from the company. These administration costs must be weighed against the tax saving from the limited company mortgage structure.
Setting Up an SPV for a Limited Company Mortgage
Most lenders offering limited company mortgage products require the company to be a special purpose vehicle - a company set up specifically to hold property, with an appropriate SIC (Standard Industrial Classification) code, typically 68100 (buying and selling of own real estate) or 68209 (other letting and operating of own or leased real estate).
An SPV set up for a limited company mortgage should have the correct SIC code from Companies House registration. Many mainstream trading companies do not have the right SIC code for limited company mortgage eligibility. Setting up a new SPV for a limited company mortgage is straightforward and can be done at Companies House for 12 pounds.
Lenders assessing a limited company mortgage application will verify the company's registration, SIC code, director details, and the structure of any shareholding. For new SPVs with no trading history, the limited company mortgage assessment relies primarily on the personal financials and guarantees of the director(s).
Limited Company Mortgage Eligibility
Lenders offering limited company mortgage products assess both the company and the individual directors. Personal credit checks and income verification for each director providing a personal guarantee are required. The limited company mortgage affordability is assessed on the rental income coverage ratio in the same way as a personal buy-to-let mortgage.
Limited company mortgage lenders include specialist lenders such as BM Solutions, The Mortgage Works, Fleet Mortgages, Paragon, and various specialist providers. The limited company mortgage market has grown significantly and now includes many mainstream lenders with dedicated SPV products.
First-time landlords using a limited company mortgage face stricter criteria at some lenders, as there is no personal buy-to-let track record. Experienced portfolio landlords with a track record of successful buy-to-let ownership typically access the widest range of limited company mortgage products.
When a Limited Company Mortgage Makes Sense
A limited company mortgage typically makes financial sense for higher-rate and additional-rate taxpayers who hold or plan to hold multiple buy-to-let properties, plan to retain rental profits in the company rather than withdrawing them immediately, and are purchasing new properties rather than transferring existing personally held properties.
Transferring existing personally held buy-to-let properties into a limited company triggers stamp duty and capital gains tax on the transfer, eliminating much of the tax benefit. A limited company mortgage strategy is most efficient when implemented from the start of the investment journey rather than retrofitted to an existing personal portfolio.
Borrowers should take qualified tax advice before committing to a limited company mortgage structure. The interaction between corporation tax, income tax on dividends, stamp duty on acquisition, and CGT on disposal requires a full lifetime model to determine whether the limited company mortgage produces a better total outcome than personal ownership.
Disclaimer: This guide is for informational purposes only and does not constitute financial advice. Products, eligibility criteria and regulations change frequently. Consult an FCA-authorised adviser before making any decision. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority.
Frequently Asked Questions
What is a limited company mortgage?
A limited company mortgage finances a buy-to-let property through a special purpose vehicle (SPV) company rather than in the individual landlord's name. The company owns the property and holds the mortgage, with the director providing a personal guarantee. Limited company mortgages are used primarily for their tax advantages for higher-rate taxpayers.
Are limited company mortgage rates higher than personal buy-to-let rates?
Limited company mortgage rates are typically 0.1 to 0.5 percentage points higher than equivalent personal buy-to-let rates. Arrangement fees are also more common. The rate premium must be weighed against the tax saving from the limited company mortgage structure.
Do I need to set up a new company for a limited company mortgage?
Most lenders require a special purpose vehicle company with an appropriate SIC code. A new SPV is straightforward to set up at Companies House. Existing trading companies without the correct SIC code may not meet limited company mortgage eligibility criteria.
Can I transfer my existing buy-to-let properties into a limited company?
Transferring existing properties into a limited company triggers stamp duty and capital gains tax on the transfer. This typically eliminates much of the tax benefit. A limited company mortgage strategy is most efficient for new purchases rather than transfers from personal ownership.
What tax advice do I need before getting a limited company mortgage?
Before committing to a limited company mortgage, take advice from a qualified tax adviser familiar with property investment. The full lifecycle analysis - acquisition costs, ongoing tax, extraction of profits, and eventual sale - is needed to confirm the limited company mortgage produces a better outcome than personal ownership.
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Last reviewed June 2026 by Chandraketu Tripathi, Finance Editor, Kaeltripton.com
