The limited company buy-to-let mortgage comparison, run properly by specialists.

Two decisions that get conflated constantly. The first is structural: should the property be owned by you, or by a limited company you own? That decision is dominated by tax, leverage and what you intend to do with the profits, and it is worth far more money than any rate difference. The second is product selection: within the chosen structure, which lender's buy to let mortgage offers the best total cost and workable criteria for your case? Most comparison journeys start and end with the second question because rate tables make it look answerable, while the structural question, the one that can be worth several thousand pounds a year, never gets asked with numbers attached.

This page runs the structural comparison honestly, line by line, and then explains why the product comparison cannot be completed from public information alone. A word on what the comparison is not: it is not a verdict that one route is correct. We arrange the company side for a living and will still tell a basic-rate taxpayer with a small loan that personal ownership probably nets them more, because a recommendation that ignores the arithmetic eventually unravels at our desk anyway, in the form of an expensive transfer a few years later. If you want to start with your own figures rather than prose, the limited company vs personal calculator models both ownership routes side by side and is the single most used tool on this site.

Through the stress test. Every buy to let mortgage is sized by an interest coverage ratio: the rent must cover the loan's interest, calculated at a stressed rate of typically 5.5%, by a set margin. For limited company borrowers that margin is 125%; for higher-rate personal borrowers it is 145%, because the lender must leave room for income tax to take its share of the rent. Same property, same rent, same stress rate: the company supports roughly 14% more borrowing. On a rent of £1,500 a month, the difference is in the region of £25,000 to £30,000 of additional loan, which at the margin is the difference between buying the property and not.

Two refinements keep the comparison honest. Basic-rate personal borrowers are often stressed at 125% themselves, eroding the company advantage for them. And five-year fixed products on both routes are frequently tested at the pay rate rather than the notional 5.5%, which lifts maximum loans across the board. Where the loan size is your binding constraint, compare structures and fix lengths together, not separately.

Size the loan both ways on the stress test calculator · method detail in the ICR stress tests guide.

Take an illustrative purchase: a £250,000 property renting at £1,300 a month, bought by a higher-rate taxpayer with a 25% deposit, so a £187,500 loan is the ask. The stress arithmetic first. At a 5.5% notional rate, the annual stressed interest on £187,500 is £10,312. The company test requires rent of at least 125% of that, £12,891 a year or £1,074 a month: the £1,300 rent passes with £226 of monthly headroom. The personal test at 145% requires £14,953 a year, £1,246 a month: the same rent passes with just £54 to spare, and a slightly smaller property, a slightly softer rent or a marginally higher stress rate fails it. The maximum loan the rent supports is roughly £226,000 through the company against £195,000 personally; here the 75% loan-to-value cap binds the company case first, but the personal route is the one living at the edge of its constraint.

Now the tax line on the same figures. Suppose the pay rate produces interest of around £9,000 a year against £15,600 of rent. Inside the company, the £6,600 surplus (before other costs) is taxed at corporation tax rates, 19% at small-profit levels, leaving roughly £5,350 retained for the next deposit. Personally, a higher-rate taxpayer pays 40% income tax on the full £15,600 less allowable non-interest costs, then claims a 20% credit on the £9,000 interest: tax of about £4,440 against the same £6,600 economic profit, leaving closer to £2,160. The company keeps roughly twice as much working capital from the identical property, every year, in exchange for the rate premium, accountancy costs and extraction tax whenever the money finally leaves. Those are illustrative numbers with deliberately round inputs; the calculator below runs the same logic on yours.

The structural decision is locked by then, but the comparison discipline matters all over again, because remortgage pricing is where lazy landlords leak money in both routes. At each fix end, the company (or you, personally) faces the same three-way choice: remortgage to a new lender, take a product transfer with the current one, or capital raise as part of the switch. Limited company mortgage borrowers should re-run the whole-of-market comparison each cycle precisely because the intermediary-only ranges reprice constantly and never advertise; a company that product-transfers by default, without comparing, hands back much of what the structure won.

The remortgage is also when the company's compounding advantage becomes visible in the numbers. The new loan is stressed at 125% on the current rent, so rental growth converts directly into capital-raising capacity, equity released inside the company to fund the next purchase without a personal tax event. A personally held property capital raises against the harder 145% test and the released funds arrive in a taxed personal context. Run one remortgage comparison through the limited company remortgages page and the difference stops being abstract.

Entry costs are closer than folklore suggests. The 5% stamp duty surcharge applies to a company on every residential purchase, and to an individual on any additional dwelling, so a personal landlord who already owns a home pays the same surcharge the company does; in Scotland both pay the 8% Additional Dwelling Supplement. Where they diverge is at the edges: an individual buying their very first property can escape the surcharge, a company never can. Running costs favour the personal route modestly, since the company files annual accounts and a corporation tax return, a few hundred pounds a year of accountancy for a small SPV as typical market practice, against self-assessment property pages personally.

Exit is where structure matters again. A personal sale pays capital gains tax at residential rates; a company sale pays corporation tax on the gain inside the company, with extraction tax on top if you then want the cash personally, though a company can also sell its shares rather than the property in some situations. And switching routes mid-life is the expensive move in either direction: transferring a personally held property into a company is a market-value sale with capital gains tax, surcharged stamp duty and a full remortgage attached. The comparison is cheapest the day before you buy, which is precisely when it deserves an hour of proper modelling.

Moving existing property anyway? The transfer property to a limited company page prices the move, with the relief caveats in the incorporation relief guide.

Three structural reasons. Coverage first: a large share of the limited company buy to let market is intermediary-only. The Mortgage Works, Leeds Building Society, Coventry Building Society, Metro Bank distribute through brokers exclusively, so their ranges, frequently the sharpest pricing for a clean SPV, never appear on consumer tables at all. Criteria second: a table can show a rate but not whether the lender behind it accepts your newly formed company, your deposit source, your property type or your first-time landlord status; the cheapest visible row is worthless if the underwriter would decline the case. Comparability third: rows mix flat and percentage fees, pay-rate and notional stress tests, and incentives like free valuations, so even the visible products cannot be ranked without converting everything to total cost at your loan size.

None of this makes comparison tables useless; it makes them a starting sample. The specialist names a genuine comparison must also include, Paragon, Kent Reliance, Fleet Mortgages, Foundation Home Loans, plus the challenger banks on complex structures, only reveal their real position when a broker prices a specific case. That is not a sales line; it is how the distribution of this market is built.

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