Limited Company Mortgages: Why Getting the Structure Right From Day One Matters

Limited company mortgages have become increasingly popular in the UK, particularly among property investors seeking more flexible long-term ownership structures. While there may be potential financial advantages when compared with purchasing property in a personal name, the suitability of any structure will always depend on individual circumstances.

What many investors underestimate is that the structure of the company itself can be just as important as the mortgage.

Getting this wrong at the outset can create avoidable complications with lenders, refinancing, future sales and long-term planning.

This guide explains the main structural considerations UK property investors should understand before applying for a limited company mortgage. The information below is for general guidance only and does not constitute tax or legal advice.

Why Limited Company Mortgages Continue to Grow in Popularity

Many investors explore limited company ownership because it can provide:

• Greater flexibility in how profits are managed
• Different planning opportunities compared with personal ownership
• A framework that can support portfolio growth

However, these benefits are highly dependent on how the company is established and operated, and professional advice should always be taken.

Common Share Structures and Deposit Considerations

A frequently used structure is:

• Two directors or shareholders
• Ordinary shares
• Often split 50:50 (for example, between spouses or business partners)

While this approach is simple, problems often arise around how the purchase funds are introduced into the company.

In many cases, funds used for deposits are introduced as shareholder or director loans rather than share capital. This can provide greater flexibility in future planning. The most appropriate method will depend on personal circumstances and should be reviewed with a qualified tax adviser.

Using Group or Holding Company Arrangements

Some investors operate property companies within wider group or holding company structures. In such cases, funding may be introduced via inter-company loans.

Where these arrangements are used, they should always be supported by formal documentation and professional advice, including appropriate commercial terms, to ensure they are structured correctly and in line with current tax and company law requirements.

ABC Share Structures and Long-Term Planning

An increasing number of investors are exploring ABC share structures, which allow for multiple classes of shares and more flexible profit distribution and ownership planning.

These structures can support longer-term business and succession planning objectives. Suitability will vary depending on family and financial circumstances, and both tax and legal advice should always be obtained before implementation.

Company Type and SIC Codes

Lenders will assess not only the company structure but also the company’s registered activity at Companies House.

Using appropriate property-related SIC codes and establishing the company correctly from the outset is essential, as certain company types and activities may restrict lender options.

Loan Documentation

Where funds are introduced into the company by individuals or other companies, lenders typically require formal loan agreements as part of the mortgage application process. Ensuring these are in place at an early stage helps avoid delays and complications during underwriting.

The Importance of Professional Advice

Mortgage advisers can explain how lenders assess limited company mortgage applications. However, tax and legal structuring should always be handled by appropriately qualified professionals.

For specialist tax advice, we work closely with our sister company WIS Accountancy
(WIS Accountancy is not regulated by the Financial Conduct Authority. It is regulated by the Chartered Institute of Management Accountants – CIMA.)

Key Findings

• Limited company mortgages offer flexibility but require careful structuring
• How funds are introduced into the company can significantly affect future planning
• Advanced structures such as group arrangements and ABC shares should only be used with professional advice
• The company’s registered activity can influence mortgage availability
• Formal loan documentation is essential for mortgage approval

Frequently Asked Questions

Is a limited company mortgage suitable for everyone?

No. Suitability depends on personal, financial and business circumstances. Independent professional advice should always be obtained.

Can the company structure be changed later?

Changes are possible but may create tax and legal implications. Early planning is strongly recommended.

Do lenders accept complex share structures?

Some lenders do, subject to review of the structure and supporting documentation.

Why do SIC codes matter?

Lenders use SIC codes to understand a company’s activities. Certain codes may restrict available mortgage products.

Important FCA Warning

As a mortgage is secured against your home, it may be repossessed if you do not keep up the mortgage repayments.

If you would like guidance on limited company mortgage options, our regulated mortgage advisers are happy to discuss your circumstances and available lending solutions. Our contact number is 02030111986