Limited Company Remortgage

What are the main reasons for remortgaging via a limited company? What are the benefits?

Generally, the benefits are related to tax efficiency. Being more tax-efficient means that you can grow and scale a property portfolio business much faster.

Generally, people are in property for profit. And despite the fact that there’s a lot more work involved with anything through a limited company, that’s what you need to make more money by growing a portfolio.

Holding investment property in a limited company means you can offset the interest costs against the profit. Then, rather than pay income tax on the profit, you actually pay corporation tax, which is lower. That’s especially the case if you’re a higher rate taxpayer.

People generally hold property in a limited company rather than in their personal names, just because it’s going to make them richer.

How does remortgaging through a limited company or as a company director work? What is the process?

If you hold your Buy to Let investments in a personal name, but you want it in a limited company, the process isn’t actually a remortgage process. It’s actually a sale and a purchase.

It’s a common misconception – it’s easy just to refer to the transaction as a remortgage when in fact it’s very different. If you own a Buy to Let property in your personal name, you can’t just remortgage it into a limited company.

First, you need to set up the limited company correctly with Companies House, usually as something called a Special Purpose Vehicle (SPV). Then you submit a mortgage application using that limited company as the applicant, to purchase that property from yourself.

You’re going to need to instruct a solicitor to act on the sale, and a separate solicitor to act on the purchase side for the limited company.

Then, a mortgage underwriter will do the usual checks on affordability and credit status and instruct a valuation for property checks. Once they’re happy, they’ll produce a mortgage offer document. The solicitors then carry out the rest of the legal work.

Often the discussion refers to remortgaging into a limited company, but realistically, you’re selling it into a limited company. It’s slightly more complicated than people think, but still massively worthwhile if you crunch the numbers.

How long does that process take?

There still aren’t as many moving parts as in a standard purchase transaction, so it’s not quite as long. You’re in more control as you’re acting both as the seller and, as the director of the limited company, as the purchaser.

That being said, it isn’t as quick as a standard remortgage, as it is a bit technical. It’s somewhere in the middle. I’d allow 8-10 weeks, but do bear in mind that the legal processes can throw up all sorts of red herrings and delays.

What documents do I need to provide if I’m remortgaging through a limited company?

Again, people sometimes have the misconception that because they’ve set up a limited company, they don’t have to provide their own documents. But you’re still going to need all of the standard documents as for any mortgage application.

That means ID (passport and driving licence), your latest three months’ personal bank statements and income evidence via three months’ pay slips if you’re employed. If you’re self-employed it’s likely to be your last two years’ SA302s and tax year overviews.

If you’re a director of a trading company that provides your main income, we need the latest two years’ company accounts and three months’ bank statements for that company as well.

Limited company applications are a little bit more complex. You’re going to need to provide a property portfolio schedule, potentially a business plan, a personal guarantee, and bank account details specifically for the limited company.

These are all things your broker should be helping you with, and we can probably complete a lot of it for you. There’s just some additional administration for limited companies in comparison to standard personal ownership.

Do many lenders offer remortages through a limited company?

We’ve got access to around 40 lenders that would entertain a limited company remortgage. But it is completely different from a normal remortgage.

If you already own a property in a limited company, a remortgage would be straightforward – you’d have access to everybody that offers limited company mortgages.

If you are buying the property from yourself and putting it into a limited company, we’ve got those 40 lenders to hand. We tend to use a handful of them that are the most competitive. The only reason we’ll go outside of that shortlist of lenders is if there’s something quite quirky about the situation that means having to pay a slightly higher rate.

Are there any risks involved with remortgaging via a limited company?

There aren’t any more risks with this transaction than with any other mortgage. People can find it that little bit more arduous, but once the property is owned in that limited company, everything else going forward is more straightforward.

It’s just that transition from personal name into a limited company that can feel a little bit like a slog. Unless you’re financially savvy or you’ve got a really good broker and you’re patient, you’re probably going to find it a little bit more difficult.

What costs are involved with remortgaging via a limited company?

You might be thinking about putting property into a limited company to save on the tax, but what’s that going to cost up front? You need to know if it’s going to be worthwhile.

Generally speaking, there is a calculable point in time where it makes sense to do this. If you’re going to keep the property for five years, for example, you start to make the money back on the upfront costs – as these can be quite high.

The biggest cost naturally is stamp duty. If you remortgage a property in a normal scenario, there isn’t any stamp duty as a result. But because this is a sale, you will pay stamp duty via the limited company and it will be with a surcharge, as well.

You’ll pay the standard stamp duty plus an additional 5%. That’s the case as of now in April 2025. It’s a fair amount. But a broker will be able to show you why that would be worthwhile.

You’ll also have solicitor fees both for a sale and a purchase. That’s a little higher, as a result. You’ll also need independent legal advice – because the limited company you’re buying through isn’t a trading company, you need to offer personal guarantees to the lender. That has to be done in a separate legal appointment. It’s normally quite quick and you can do it over the phone or video call.

Just in case people are worried about that being a big expense, we can secure this type of appointment for around £300 to £500.

You’ll get different product options – some with fees and some without. Again, it’s a case of seeing what works best overall, bearing in mind the rate and the product fee – which could be paid or added to the loan.

As an example, it might be a £995 product fee or a percentage of the loan. On a £200,000 loan at 1%, you’d be looking at an additional £2,000.

There are also valuation fees, normally quite small again, depending on the product you choose. And if you instruct a broker – and it could be very tricky to get to completion without one – there might be a fee as a percentage of the loan, or a flat fee of around £995.

A good broker will sit down with you and explain exactly how much it costs you to put a property into a limited company. We’ll work out how many years it’s going to take in tax savings to break even and start to make profit.

Can I remortgage through my limited company with bad credit?

Yes. Although it’s through a limited company, there are still those personal guarantees, credit checks and affordability. That’s all done on you personally.

People might think that it’s helpful to open up a limited company if you have bad credit and buy through that, but actually that’s not the case. You will be credit-scored with any lender on a personal basis, whether it’s residential, Buy to Let or through a limited company.

Credit score will determine which lenders you can go to. Perfect credit scores tend to mean you can go with a high street lender; impaired credit means mid-prime lenders, and then really bad credit is the subprime lenders who come with higher rates and fees.

Generally speaking, we can place these cases, but if you’re bankrupt, it might be difficult to find you a mortgage – or one you could afford. It really does depend on the severity of the bad credit.

What else do we need to know about a limited company Buy to Let remortgage?

Just to expand on the last point, bad credit is a term that’s bandied around quite easily. I’ve spoken to people who are anxious about their credit score, and they’ve just got a few grand on a credit card.

I’ve also had people that assume they’re going to get a high street mortgage, yet they’re in debt up to their eyeballs. Everyone’s definition is different. A broker will set out a roadmap for your credit situation, so if you can’t get the deal that you want we explain how you can get where you want to be.

You might need to cover a certain debt first or action something on your credit file. Or bring your credit card usage down into 50% of your limit. There’s lots of different ways to improve your score quite quickly, with a little focus, but people often feel overwhelmed and don’t know what to do first.

With regards to limited company mortgages, they’re very complex. I wouldn’t even go to a broker who isn’t versed in this area, let alone try and do it yourself. So look for a good broker, a good solicitor and a good accountant who knows about property tax.

With that powerhouse of people behind you, your business model as a property investor will be much more likely to succeed.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.

For specialist tax advice, please refer to an accountant or tax specialist.