How to get a limited company mortgage

Yes. A UK limited company can take out a buy-to-let mortgage to buy or refinance a property let to tenants. Many lenders offer them, mostly to companies set up only to hold property. Residential mortgages for a home to live in are not offered to companies, because a company cannot live in a property.

The company is the borrower and owns the property, and the directors usually guarantee the loan personally. The limited company mortgages section covers each type of company lending in more detail.

The first step is to register a company at Companies House with property letting codes, appoint directors, issue shares and open a business bank account. An accountant or formation agent can help. Doing this before finding a property keeps things simple, because the offer, mortgage and purchase all need to be in the company's name.

Deciding who will be directors and shareholders matters, because lenders check each of them and most ask for personal guarantees.

Lenders usually ask for a deposit of at least a quarter of the price, paid into the company, often as a loan from the directors. Stamp duty is charged at the higher rates for additional dwellings, and legal costs are usually higher than for a personal purchase because of the company documents and guarantees.

Valuation fees, arrangement fees and accountancy costs also need budgeting for. Lenders check where the deposit came from.

Applications go through a broker or direct to lenders that accept company borrowers. Lenders check the company, the directors' credit and experience, and the expected rent against the interest at a stressed rate. A new company with no accounts is usually accepted. Directors take independent legal advice on the guarantee before completion.

Getting an agreement in principle in the company's name before making an offer shows the seller that finance is likely, and it confirms the lender accepts the structure.

Whether a company suits a landlord depends on their tax position, other income and long-term plans, so most take advice from an accountant first. Moving property already owned into a company counts as a sale, so it can bring stamp duty and capital gains tax, and many landlords use a company only for new purchases.

Running a company also brings annual accounts, confirmation statements and corporation tax returns, which add cost each year.