Limited company buy to let mortgage articles of association interest only is a specialist mortgage product designed for landlords purchasing or refinancing rental properties through a limited company structure. With rising taxation on personally held investment properties due to Section 24, many landlords are turning to limited companies to optimise tax efficiency. These mortgages are typically interest-only, meaning monthly payments cover only the interest, not the capital, which helps maximise rental yield and cash flow.
In today’s 2025 market, buy-to-let lending remains competitive, with lenders offering a range of landlord mortgage options tailored to limited companies. Articles of association—governing documents for limited companies—must align with lender requirements, particularly regarding property letting powers. This type of investment property finance is increasingly popular among portfolio landlords seeking long-term growth, tax advantages, and flexible remortgage options. Understanding the criteria, affordability rules, and lender expectations is essential for success in this niche.
Quick Facts
– Interest rates: 4.5% to 6.5% (2025 average)
– Minimum deposit: 25%
– Rental coverage: 125% to 145% at 5.5% stress rate
– Maximum loan-to-value (LTV): 75%
– Arrangement fees: 1% to 2% of loan amount
– Application timeline: 4 to 8 weeks
Limited company buy-to-let mortgages typically require a higher rental coverage ratio and a larger deposit than residential mortgages. Lenders assess affordability based on projected rental income, not personal income, and stress test interest-only repayments at higher notional rates to ensure sustainability.
How This Mortgage Works
A limited company buy to let mortgage articles of association interest only works by allowing landlords to purchase or refinance a rental property through a special purpose vehicle (SPV) limited company. The mortgage is structured so that monthly payments cover only the interest, with the capital repaid at the end of the term—typically via sale, remortgage, or other investment exit strategies.
Lenders offer various product types, including 2- and 5-year fixed rates, variable rates, and tracker mortgages. Interest-only terms are popular among portfolio landlords due to lower monthly outgoings and improved cash flow. However, lenders require the company’s articles of association to include clauses that permit property letting and mortgage borrowing.
This mortgage suits experienced landlords, portfolio investors, and those looking to grow their property holdings under a limited company for tax efficiency. It is also suitable for first-time landlords with strong financial profiles. Compared to standard residential mortgages, these products involve more complex underwriting, company structure checks, and stricter affordability criteria.
In 2025, lender appetite for limited company BTL remains strong, with many specialist lenders and challenger banks offering competitive BTL mortgage rates. However, mainstream high street lenders may have limited offerings in this space.
Eligibility and Criteria
To qualify for a limited company buy to let mortgage articles of association interest only, applicants must meet specific lender criteria, which differ from personal name buy-to-let applications.
Income Requirements:
Most lenders do not require a minimum personal income for limited company BTLs, but some may prefer directors to earn £25,000+ annually. The focus is primarily on rental income from the property.
Rental Coverage and Stress Testing:
Affordability is assessed using the Interest Coverage Ratio (ICR), typically requiring rental income to cover 125% to 145% of the mortgage payment, stress-tested at 5.5% or higher. For example, a £1,000 monthly mortgage payment would require rental income of £1,250 to £1,450.
Property Type Restrictions:
Lenders may restrict lending on non-standard construction, HMOs (houses in multiple occupation), studio flats under 30 sqm, or properties above commercial premises. Some lenders specialise in HMOs or multi-unit blocks.
Credit Score Expectations:
A good credit history is essential. While limited company mortgages are assessed on the company, directors’ personal credit files are also reviewed. Adverse credit can limit lender options or increase rates.
Age and Employment:
Directors must typically be aged 21 to 85 (at mortgage end). Employment status matters less than experience in property investment, although self-employed applicants must show stable income.
Portfolio Landlords:
For landlords with four or more mortgaged properties, lenders apply additional scrutiny. This includes a full portfolio review, rental income stress testing across all properties, and business plan assessments (Read our guide to portfolio landlord mortgages).
Limited Company vs Personal Name:
Limited company applications require an SPV registered with Companies House under SIC code 68209 (letting and operating of own or leased real estate). Articles of association must authorise property letting and borrowing. Personal name applications are simpler but less tax-efficient.
Legal Compliance:
Applicants must comply with right-to-rent checks, local licensing schemes (especially for HMOs), and EPC regulations. Failure to meet these can result in mortgage rejection.
Costs and Affordability
Limited company buy-to-let mortgages come with several associated costs:
– Arrangement fees: Typically 1% to 2% of the loan
– Valuation fees: £300 to £1,000 depending on property value
– Legal fees: £1,000+ for company structures
– Broker fees: £500 to £2,000 depending on complexity
Interest-only mortgages reduce monthly payments but do not reduce the loan balance. Fixed rates offer stability, while variable and tracker rates may be cheaper initially but carry the risk of increases.
Rental income is the primary affordability metric. Lenders use projected market rent and apply stress tests to ensure the mortgage remains affordable if rates rise.
Taxation is a key driver for using a limited company. Unlike personal ownership, limited companies can deduct full mortgage interest from rental income, avoiding Section 24 restrictions. However, corporation tax (currently 25%) and dividend tax on withdrawals must be considered.
Landlord insurance and buildings insurance are mandatory. Some lenders also require rent guarantee insurance.
The Application Process
Applying for a limited company buy to let mortgage articles of association interest only involves several stages:
1. Research lenders and mortgage products, or consult a specialist broker.
2. Set up an SPV limited company with correct SIC code and compliant articles of association.
3. Gather documentation: proof of ID, company registration, business bank statements, rental projections, property details, and director income.
4. Submit application to lender via broker or directly.
5. Lender conducts credit checks, company structure review, and underwrites the case.
6. Property valuation and survey arranged by lender.
7. Legal conveyancing process begins, including company structure verification.
8. Mortgage offer issued, contracts exchanged, and funds released.
The process typically takes 4 to 8 weeks. Working with an experienced mortgage broker can help avoid delays and increase approval chances.
Common reasons for rejection include unsuitable articles of association, insufficient rental income, poor credit history, or non-standard properties. Ensuring documents are accurate and the company is properly structured is vital.
Benefits, Risks and Alternatives
Benefits of a limited company buy to let mortgage articles of association interest only include:
– Full mortgage interest tax relief (corporation tax rules apply)
– Lower monthly payments due to interest-only structure
– Enhanced cash flow for reinvestment
– No impact on personal income tax bands
– Easier to manage multiple properties under one entity
Risks and challenges include:
– Higher interest rates and fees than personal BTLs
– Void periods affecting income
– Regulatory changes (e.g., EPC rules, licensing)
– Limited lender pool
– Complexity of company setup and compliance
Alternative finance options include:
– Bridging loans for short-term purchases or refurbishments
– Commercial mortgages for mixed-use or large HMOs
– Development finance for ground-up or conversion projects
Remortgaging within the same lender (product transfer) may be simpler but could limit rate options. Switching lenders may offer better terms but involves full underwriting.
Frequently Asked Questions
What deposit do I need for a buy-to-let mortgage?
Most lenders require a minimum deposit of 25% for a limited company buy-to-let mortgage. Some may accept 20% for lower-risk properties or experienced landlords, but higher deposits often secure better interest rates. For HMOs or multi-unit blocks, deposits of 30% or more may be required.
Can I get limited company buy to let mortgage articles of association interest only through a limited company?
Yes, you can. The property must be purchased through a special purpose vehicle (SPV) limited company with the correct SIC code (usually 68209). The company’s articles of association must permit property letting and mortgage borrowing. Lenders will assess both the company and its directors during the application.
What rental coverage do lenders require?
Lenders typically require a rental coverage ratio of 125% to 145% of the mortgage payment, stress-tested at a notional interest rate of 5.5% or higher. For example, if your mortgage payment is £1,000 per month, your rental income must be between £1,250 and £1,450 per month to qualify.
How does Section 24 tax affect buy-to-let mortgages?
Section 24 restricts mortgage interest relief for personally owned rental properties, increasing tax liability. Limited companies are not affected, as they can deduct full mortgage interest as a business expense. This is a key reason many landlords now use limited companies for property investment.
Can I live in a property with limited company buy to let mortgage articles of association interest only?
No. Properties purchased with a buy-to-let mortgage must be let to tenants and cannot be occupied by the borrower or their family. Living in the property would breach mortgage terms and could lead to repossession. These mortgages are strictly for investment purposes.
What credit score do I need for a buy-to-let mortgage?
While there’s no fixed score, most lenders expect a good credit history with no recent defaults, CCJs, or bankruptcies. Directors of the limited company must have clean personal credit files. Specialist lenders may consider applicants with minor credit issues but at higher rates.
Key Takeaways
Limited company buy to let mortgage articles of association