Limited Company Director Mortgage

Podcast approved by The Openwork Partnership on 28/05/2025.

Can I transfer an existing mortgage held personally to a limited company if I become a company director?

I can’t really see the benefit in doing that. If you’re living in a property yourself, there is nothing to gain from transferring a property that you’re the owner.

Firstly, a lot of lenders won’t allow you to rent that property back to yourself. Secondly, there’ll be a lot of extra fees involved and stamp duty.

However, if you’re looking at this where you own a Buy to Let property in your own personal name and you have an SPV set up to hold property, you can transfer it from your own name to your limited company, as long as the property is rented out.

There’ll be extra costs involved, such as solicitors and stamp duty. But some of the tax benefits of keeping it under a limited company could outweigh the cost of transferring over in the long run. That’s a conversation you’d need to have with your accountant.

Are there any advantages or disadvantages to getting a mortgage as a limited company director rather than sole trader?

It just depends on how your business is set up. If you’re a sole trader, you have to apply as such. If you’re a limited company director, similarly, there’s only one option for you.

One of the big benefits when applying as a limited company director is that some lenders, depending on the share of the business that you own, will allow you to use retained business profits, not just what you’ve drawn out. That can usually mean you get a higher borrowing amount than you are assessed as a sole trader.

Are there any restrictions or limitations on the types of properties that can be purchased through a limited company?

It depends on the angle this question comes from. If you’re looking at buying a property for yourself to live in and you are a limited company director, lenders just assess it the same way.

It’s the same whether you’re buying it as an employed person, as a limited company director or as a sole trader.

When you’re setting up a Special Purpose Vehicle to buy a Buy to Let property, again, there are no limitations, other than it needing to be a Buy to Let mortgage rather than residential.

Are there any tax implications or considerations for limited company directors obtaining a mortgage?

If you’re a limited company director and you want to buy a property, the only tax involved would be stamp duty. The other tax you pay for the business all depends on what your profits were for the year – but that’s an accountancy thing rather than anything to do with buying a home.

What is the typical interest rate and repayment term for limited company director mortgages?

There are so many different variations. When you’re buying a property, there’s no typical interest rate. You could have two people with the same deposit and the same mortgage term, but one’s got great credit and the other’s is terrible. Or perhaps one doesn’t earn enough to qualify for the same lenders. The interest rate here would vary dramatically.

Plus, we could have a conversation today and the rates could be different tomorrow. So there’s no real typical interest rate.

The repayment term all depends on your personal preferences. If you can afford to get your mortgage paid off sooner, you may want a 15-year mortgage. But if you want to keep the payments as low as possible, you might prefer a 40-year mortgage.

It’s hard to give a generic answer here because it all depends on the person that’s applying and what’s important to them. That’s why a mortgage advisor would have that conversation with you, to give you the appropriate advice.

Can I use a limited company director mortgage to purchase a Buy to Let property?

There’s no such thing as a limited company director mortgage. It’s just the way lenders assess your income. For a limited company director, they calculate your income differently from someone employed or a sole trader.

It would just be a Buy to Let mortgage. It wouldn’t be a limited company Buy to Let mortgage – ultimately, you’re a limited company director and you’re purchasing a Buy to Let property.

How does being a guarantor for another person’s mortgage affect my own eligibility as a limited company director?

Being a guarantor for somebody else’s mortgage can potentially affect your affordability when buying another property. Let’s say you’re a guarantor for somebody’s mortgage and the payments are £1,000 a month.

With some lenders, when you’re applying for a new mortgage, they may use that £1,000 outgoing as an expense, and that may reduce the amount that you can borrow.

Can I remortgage a property as a limited company director? What are the potential benefits?

There are no differences in doing it as a limited company director compared to anybody else. But the overall benefit of remortgaging is to avoid the Standard Variable rate.

For example, if you’re on a five-year fixed rate and that’s coming to an end, if you don’t remortgage you move onto your lender’s Standard Variable Rate – and your interest rate jumps through the roof.

If you’re able to remortgage before that happens, it puts you in a position to negotiate better deals. You can negotiate a cheaper rate than if you did nothing at all.

What happens to the limited company if I’m unable to make mortgage payments on time?

You would have bought a property through a limited company to rent out as a Buy to Let, because that’s the only way you can do this.

If you’ve bought a property under a limited company and you don’t pay the mortgage, it would be no different than if you owned it in your own personal name. If you miss multiple payments and make no arrangements to pay the mortgage back, the lender would eventually look at repossessing the property from you.

Are there any additional costs or fees associated with obtaining a mortgage through a limited company?

If you’re buying a property through a limited company for Buy to Let purposes, there’s usually higher product fee, because the lenders are a little bit more niche.

Interest rates also tend to be slightly higher. Beyond the mortgage, there’s usually also a greater fee for your accountant to process and deal with your tax returns at the end of the year.

How can I improve my chances of getting approved for a mortgage as a limited company director?

It’s the same as for anyone looking for a mortgage – it’s all about preparation. Have a conversation with a mortgage broker early on in the process to work out your affordability, how much things are going to cost and how much deposit you need. Speaking to a broker early on is a massive help.

Another factor is making sure your credit report is all up to scratch. It’s not impossible to get a mortgage if you have bad credit, but it limits your options and you could end up paying more in the long run because of it.

What else do we need to know about getting a mortgage as a limited company director?

Just so that people are aware, there’s a difference between a limited company director getting a mortgage and getting a limited company mortgage.

A limited company director buying a property to live in will be assessed based on the income that the business has earned. Lenders assess you as a person.

But buying a property under a limited company for Buy to Let purposes is different. Here, you would be the director of a Special Purpose Vehicle, and lenders assess that similar to any other Buy to Let under a limited company.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

MOST BUY TO LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

Approved by The Openwork Partnership on 28/05/2025.