In short: Yes, the common route is remortgaging or taking a further advance on your own home, then lending that money into your buy-to-let limited company as a director’s loan, which the company uses as its deposit. Done correctly, the interest you pay personally can still qualify for tax relief under HMRC’s “qualifying loan interest” rules, because the money is being used wholly for the company’s rental business. The main risks are that your home becomes the security behind the whole structure, and that some residential lenders restrict or refuse to lend where funds are earmarked for a business purpose.
The mechanics: how landlords actually do this
Because a limited company buying its first buy-to-let usually needs a deposit of at least 20–25% of the purchase price (often more for newly formed SPVs or lower-yielding properties), and the company itself typically has no assets or trading history to borrow against, the deposit has to come from somewhere. Common approaches:
- Remortgage or further advance on your residential home, raising cash against the equity you’ve built up. This is usually the cheapest form of borrowing available to a landlord, because residential mortgage rates sit below buy-to-let and unsecured lending rates.
- Personal loan or credit facility, which avoids touching your home mortgage but is usually a more expensive and less flexible source of capital.
Once the money is in your hands personally, you then lend it to your own limited company as a director’s loan, rather than gifting it or buying shares with it. The company records this as a liability (a director’s loan account), and the property purchase or deposit is funded from that loan.
Why the loan structure matters for tax
If you simply gift the money to the company or subscribe for extra shares with it, there’s no clean route to personal tax relief on your borrowing costs. Structuring it as a loan to the company opens up two possibilities:
- The company can pay you interest on the director’s loan, which is a deductible expense against the company’s Corporation Tax, but that interest is then taxable income in your hands personally (the company must generally deduct basic-rate tax at source when paying it, and you’d report it via Self Assessment).
- You may be able to claim personal tax relief on the interest you pay on your own borrowing (the remortgage or loan you took out against your home) under HMRC’s “qualifying loan interest” rules (HMRC helpsheet HS340). This applies where you take out a loan to lend money to, or buy shares in, a close company (broadly, one controlled by five or fewer shareholders, which describes the overwhelming majority of landlord SPVs) in which you own more than 5% of the share capital, or in which you work for the greater part of your time. The borrowed money must be used wholly and exclusively for the company’s business, in this case, the rental property. If those conditions are met, the interest on your personal borrowing can be set against your general income for tax relief purposes, separate from and outside the Section 24 restriction that applies to personally-held rental property (see our guide to Section 24 and mortgage interest relief).
This is a genuinely useful structure, but it depends on getting the paperwork right, a properly documented loan agreement, clear evidence the funds went straight into the company’s business, and correct treatment in both your personal Self Assessment and the company’s accounts. Get an accountant to set this up rather than assuming it self-executes; HMRC can and does challenge loosely structured arrangements.
How lenders view it
Residential mortgage lenders are generally comfortable with you raising capital via a remortgage or further advance for “general purposes” or “debt consolidation and investment,” but attitudes vary once you specifically disclose the money is going into a limited company for buy-to-let purchase:
- Most high-street lenders will lend on a further advance without deep scrutiny of end use, provided your income and affordability checks stand up on their own (i.e., not relying on the future rental income to support the residential mortgage).
- Some lenders explicitly ask the purpose of large capital raises and may decline or flag if it’s clearly for a geared property investment, particularly if it pushes your loan-to-value or debt-to-income ratios up.
- Being upfront and accurate on mortgage applications matters, misrepresenting the purpose of a capital raise is mortgage fraud, however unlikely detection might feel at the time.
The real risk: your home is now doing double duty
The structural risk in this approach is that your family home becomes, in effect, the collateral behind a leveraged property investment, even though the mortgage itself sits only against your house, not the BTL. If the rental investment underperforms, the loan doesn’t evaporate: you still personally owe the money secured against your home, regardless of what happens to the company or the property it bought. This is different from a company mortgage secured only against the BTL asset, where a failure in the rental business, in the worst case, threatens the investment property rather than your own front door.
Before doing this, stress-test the downside: could you service the increased mortgage payment on your home comfortably even if the rental property sat empty for several months, or the company’s returns disappointed? Lenders’ standard affordability checks won’t ask this specific question for you, it’s your own risk to manage.
Practical checklist
- Get independent mortgage advice on whether a further advance, product transfer with additional borrowing, or full remortgage is most cost-effective for your specific lender and rate.
- Get an accountant to set up the director’s loan and qualifying loan interest claim correctly from day one, retrofitting it later is harder and riskier.
- Model the worst case: vacant property, rate rises on your home mortgage, and no rental income for several months.
- Confirm with your residential lender what they need disclosed about the purpose of the funds, and be straightforward about it.
Related reading
Sources
This is general information, not legal, tax, or financial advice. Figures and rules referenced are accurate to the best of available information as of July 2026 unless stated otherwise. Tax rules depend on personal circumstances, always check current HMRC guidance (gov.uk) or consult a qualified accountant/tax adviser before making decisions.
Last Updated on September 21, 2026