First-Time Buyer Limited Company

What’s the maximum amount I can borrow for a mortgage as a first-time buyer? What’s the minimum deposit? How does this differ via a limited company?

As we’ve mentioned in other podcasts, first-time buyers are treated differently with Buy to Let. You’re assessed as if it’s a residential purchase.

But it’s also different if that first-time buyer is buying through a limited company rather than personally. For a limited company landlord, the criteria is tighter.

Most lenders want landlord experience, so the criteria is specific and specialist. It can be done, though, with a select few lenders. It opens up more options if you’re already a homeowner or landlord.

Most lenders need a 25% deposit on this type of mortgage. A few will go with a 20% deposit, which is an 80% Loan to Value, but it’s rare.

What if I’m a first-time buyer and have bad credit? Will this affect me getting a mortgage through a limited company?

Yes, limited company directors are credit searched for Buy to Let. We would need to see the credit file and check whether a mortgage would be achievable for you.

We look at the whole scenario and the whole credit file, and then look for lenders that will accept it.

Can I get a Buy to Let mortgage via a limited company as a first-time buyer?

As we’ve covered, you can get a mortgage as a first-time buyer, first-time landlord through a limited company. However, there are limited options with lenders, so do seek advice.

What are the benefits and risks of getting a mortgage via a limited company as a first-time buyer?

If your first purchase is an investment property, the main benefit of doing it through a limited company is that you won’t lose any government first-time buyer allowances. If you do want to buy your own residence in the future, you will still be able to get the incentives – such as a reduction on stamp duty.

Bear in mind that interest rates are higher on limited company Buy to Let mortgages. They also have higher product fees and higher valuation fees, plus admin fees. There can be a lot of fees on limited company Buy to Let, with lenders adding things on.

We would look at the whole picture for you and consider your accountant’s advice too. An accountant or tax adviser should go through the tax savings of you going through a limited company compared to the mortgage costs. We’re happy to speak to your accountant about the whole thing so that you can make a fully informed decision on this.

What else do we need to know about limited company mortgages for a first-time buyer?

There are always many questions from clients on limited company Buy to Let because it’s quite a vast area to look at. We’re always here and happy to help. So just contact us and let’s see what we can do.

Key Takeaways:

• A first-time buyer can obtain a mortgage through a limited company, but it must be for a Buy to Let (investment) property, not a residential one.

• Lender options are highly restricted for first-time buyers who are also first-time landlords using a limited company Buy to Let. Options open up if buying with an existing homeowner or experienced landlord.

• The typical minimum deposit required for this type of mortgage is 25%, with an 80% Loan to Value (LTV) being rare with most lenders.

• A major benefit is that purchasing an investment property through a limited company allows the first-time buyer to retain government first-time buyer allowances (like stamp duty reduction) for a future personal residence purchase.

• Risks include higher interest rates and additional fees, making professional advice from an accountant or tax adviser crucial to assess the tax savings versus the mortgage costs.

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

THE FINANCIAL CONDUCT AUTHORITY DOES NOT REGULATE MOST BUY TO LET MORTGAGES.