Should You Fix or Track? Choosing the Right BTL Mortgage Rate in 2025

Understanding the Landscape: Limited Company Buy to Let Mortgages

Introduction

With the evolving landscape of property investment and the ever-changing interest rate environment, choosing the right mortgage structure for your buy-to-let (BTL) property is more critical than ever. This is particularly true for landlords operating through a limited company, where the financial implications differ from those of individual ownership. In 2025, the decision between a fixed-rate and a tracker-rate mortgage could significantly affect your rental income and long-term investment strategy. This blog explores how landlords—especially those using a limited company structure—can navigate the choice and the key considerations to bear in mind.

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

Limited Company vs Personal BTL

One of the first decisions landlords face is whether to invest as an individual or through a limited company (often referred to as an SPV—Special Purpose Vehicle). Limited company buy to let mortgages have become increasingly popular due to changes in tax relief on mortgage interest for individual landlords.

• Tax Efficiency: With a limited company, mortgage interest is considered a business expense, allowing for full tax deductibility. This contrasts with personal ownership, where relief is restricted.
• BTL Corporation Tax UK: Profits within a limited company are subject to corporation tax (currently 25% as of 2025), which can be lower than higher-rate personal income tax.
• Flexibility in Ownership: Holding property in a company allows multiple shareholders, potentially improving long-term estate planning.

However, limited company mortgages often come with higher interest rates and fees. Weighing these costs against tax savings is crucial.

Fixed vs Tracker: What Are the Differences?

Fixed-Rate Mortgages

A fixed-rate BTL mortgage offers predictable repayments, safeguarding against interest rate increases for a set period—typically 2, 5, or 10 years. In the context of a limited company, this stability helps in financial planning and budgeting.

Pros:

• Budget certainty
• Protection against Bank of England base rate increases
• Popular among lenders, especially for limited company BTLs

Cons:

• Early repayment charges can be steep
• You may miss out if interest rates fall

Tracker-Rate Mortgages

Tracker mortgages follow the Bank of England base rate, typically with a set margin above it. However, for limited company BTL borrowers, tracker options are sparse in 2025, offered only by a handful of specialist lenders.

Pros:

• Potential to benefit from rate cuts
• Usually lower early repayment charges

Cons:

• Uncertainty with monthly payments
• Limited availability, particularly for SPVs or LLCs

SPV Mortgage Pros and Cons

Pros:

• Greater tax efficiency for higher-rate taxpayers
• Easier to grow a portfolio under a company structure
• Succession planning and shared ownership simplified

Cons:

• Higher mortgage rates and arrangement fees
• Additional accountancy and legal requirements
• Limited product availability compared to personal BTL

Practical Tips / Recommendations

1. Assess Your Long-Term Goals: If you plan to hold the property long-term and value predictability, a fixed-rate mortgage might be more appropriate.
2. Consider Tax Implications: Work with a tax adviser to evaluate whether a limited company structure offers genuine savings for your situation.
3. Compare Whole-of-Market Options: Don’t limit yourself to mainstream lenders. Consider brokers who specialise in limited company BTL.
4. Plan for Exit: Be mindful of early repayment charges and plan accordingly if you foresee refinancing or selling.
5. Budget for Costs: Include legal, accountancy, and ongoing admin costs of running a property company.

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

FAQ Section

1. Is it better to buy a BTL property through a limited company or personally?

It depends on your tax band and long-term goals. Limited companies may offer tax advantages but often come with higher mortgage costs.



2. Are tracker mortgages available for limited company buy to let?

They are available but limited. Only a few specialist lenders offer tracker deals for SPVs or LLC structures in 2025.



3. What are the tax implications of limited company BTL?

Companies pay corporation tax on profits, and mortgage interest is fully deductible. Personal ownership now has restricted interest relief.

4. Can I switch from personal to limited company ownership later?

Yes, but it involves selling the property to your company, which may trigger stamp duty and capital gains tax.



5. What’s the most important factor in choosing fixed or tracker?

It comes down to your appetite for risk and interest rate predictions. Fixed offers stability; tracker offers flexibility but uncertainty.

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