Limited company mortgage calculator
A limited company is tested at a lower interest cover ratio than a higher rate individual, so the same rent supports a larger loan. Enter the rent and the value to see the maximum loan an SPV can borrow, and compare it side by side with holding the property personally.
A limited company buy to let mortgage is sized on the rent, tested at a stress rate and an interest cover ratio. Companies are usually stressed at 125 percent cover, against 145 percent for a higher rate individual, which is why the same rent supports more borrowing inside a company. Enter the monthly rent, the property value and the loan to value cap below. The calculator returns the maximum loan the rent supports at the company test, the loan the loan to value cap allows, and a comparison row showing what the same rent would support if you held the property personally as a higher rate taxpayer.
- Rent supports (company, 125%)£0
- Loan to value cap allows£0
- Binding constraint…
- Stressed interest at max loan£0
- Limited company (125%)£0
- Personal higher rate (145%)£0
- Extra borrowing in a company£0
Indicative only. Not financial or tax advice, and not an offer of finance. Company lending is a smaller panel, usually requires an SPV and directors' personal guarantees, and criteria varies.
How the company mortgage calculation works
Two limits sit over every buy to let loan, company or personal, and the loan is the lower of the two. The first is the rental stress test: annual rent divided by the stress rate, divided by the interest cover ratio. The second is the loan to value cap: the property value multiplied by the maximum loan to value the lender allows. The calculator works out both and reports which one binds, because that tells you what to change. If the rent binds, you need a larger deposit or a higher rent. If the loan to value binds, the rent has headroom and the deposit is the constraint.
Why a company borrows more on the same rent
A limited company, usually a special purpose vehicle set up only to hold property, is stressed at a lower interest cover ratio than a higher rate individual, commonly 125 percent against 145 percent. The reason sits in the tax. Since Section 24, an individual higher rate landlord can no longer deduct mortgage interest in full, only a 20 percent tax credit, so less of the rent survives to service the loan and lenders demand more cover. A company deducts finance costs in full against rental income before corporation tax, so more of the rent is available and a thinner cover is accepted. On rent of 1,100 pounds a month at a 5.5 percent stress rate, the company test supports about 192,000 pounds against about 165,500 pounds personally, roughly 26,500 pounds of extra capacity on identical rent.
What the calculator does not price
The extra borrowing is only one side of the ledger. Company buy to let rates and fees tend to run a little higher than personal ones, the lender panel is smaller, and the directors usually give personal guarantees. Against that, finance cost relief, the ability to retain profit at corporation tax rates and roll it into the next purchase, and the flexibility of a director's loan often make the structure work for a higher rate landlord building a portfolio. It is rarely worth incorporating a single low yielding property for the sake of it. Model the tax with the limited company versus personal calculator, read the full criteria on limited company buy to let mortgages, and if you hold four or more properties see portfolio mortgages and the portfolio LTV and ICR calculator. Speak to an accountant before you incorporate.
Limited company mortgage calculator: common questions
How much can a limited company borrow for a mortgage?
A limited company buy to let mortgage is sized on the rent, not on the company's trading profit or the director's salary. The lender divides the annual rent by its stress rate and its required interest cover ratio. Companies are usually tested at a 125 percent interest cover ratio, lower than the 145 percent applied to a higher rate individual, because the company deducts finance costs in full before corporation tax. On a 5.5 percent stress rate, rent of 1,000 pounds a month supports around 174,545 pounds in a company against about 150,470 pounds for a higher rate individual. The loan to value cap, usually 75 or 80 percent, applies on top. All figures are indicative.
Is it easier to get a mortgage if you are a limited company?
Not easier as such, but often more efficient for the borrowing. Because a company is tested at 125 percent interest cover rather than 145 percent, the same rent supports a larger loan, and finance costs stay fully deductible against rental income before corporation tax, which higher rate individuals lost under Section 24. The trade off is a smaller lender panel, usually a special purpose vehicle with the right SIC code, personal guarantees from the directors, and slightly higher rates and fees. For most higher rate landlords buying to hold, the structure still stacks up. We model it on the numbers rather than assume it.
Can a limited company get a 100 percent mortgage?
No. Limited company buy to let lending is capped by loan to value in the same way as personal lending, typically at 75 percent, sometimes 80 percent on standard property. A 100 percent mortgage is not available on a company buy to let. The company puts in the deposit, usually funded by a director's loan, which can later be drawn back out of the company tax free as the loan is repaid. Enter your rent and loan to value above to see where the rental stress test and the loan to value cap each land.
How much deposit do you need for a limited company mortgage?
Plan for a 25 percent deposit, meaning 75 percent loan to value, which opens the widest choice of lenders and the sharpest company rates. Some lenders reach 80 percent loan to value at a higher rate, so a 20 percent deposit is possible on the right property. On lower yielding stock the rent, not the deposit, often sets the ceiling: if the rent will not stress to the loan you want, a larger deposit is the way to bring the loan within cover. The calculator shows both limits so you can see which one binds.
Related calculators and finance
Limited company vs personal calculator
Model the after tax cash from holding in a company against holding personally, over 5 or 10 years.
Open →Buy to let mortgage calculator
Size the loan on any borrower type and check a proposed loan against the stress test.
Open →Limited company buy to let mortgages
SPV structure, SIC codes, personal guarantees, rates and the lender panel.
Learn more →Buying through a company?
Send us the rent, the value and the SPV details. We size the loan across the company lender panel and come back with a view on the maximum loan and the rate.