Limited Company Mortgage Brokers
With the new Buy to Let legislation many individuals have seen advantages in buying property through a Limited Company. AS Financial is able to give advice as to whether this is truly an advantageous action and, if so, which providers will lend.
Owning investment properties in a Limited Company structure has the advantage of a potentially lower tax rate on the income and being able to offset all of the mortgage payments. There are disadvantages though. Capital in a Limited Company may have a tax position when you use the funds personally and mortgage costs tend to be higher.
This makes choosing the right options complicated and difficult. Using AS Financial will simplify your options and give you a clear path to make the right decision.
This makes choosing the right options complicated and difficult. Using AS Financial will simplify your options and give you a clear path to make the right decision.
What is a limited company mortgage?
A limited company mortgage is a type of mortgage designed for properties purchased and owned through a limited company rather than in an individual’s name. These mortgages are often used by property investors, especially those involved in buy-to-let schemes, who want to benefit from tax advantages or to separate personal and business finances.
Can I get a mortgage as a limited company?
Yes, many lenders offer mortgages to limited companies, especially for property investors and landlords. While not all lenders provide this option, there is a growing number that cater to limited companies, particularly for buy-to-let or commercial property purchases. The application process can be more detailed compared to personal mortgages, but it's a viable route for business owners and investors.
How do limited company mortgages differ from personal ones?
Limited company mortgages usually have slightly higher interest rates and stricter lending criteria compared to personal mortgages. Lenders may require additional documents such as company accounts, director guarantees, and proof of income. However, owning property through a limited company offers long-term tax advantages, as profits are subject to corporation tax rather than personal income tax, and rental income can be distributed as dividends.
What are the tax benefits of a limited company mortgage?
One of the key tax benefits is that mortgage interest can be fully deducted as a business expense, reducing the company's taxable profit and thus lowering the amount of corporation tax owed. Additionally, profits from rental income are taxed at the lower corporation tax rate rather than personal income tax, which can result in significant savings for higher-rate taxpayers. Furthermore, you can distribute profits through dividends, which may be taxed more favorably than personal income.
