Can I get a mortgage with an LLP?

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Paige explains the mortgage process for people with a Limited Liability Partnership.

What is a limited liability partnership and can you get a mortgage in an LLP?

An LLP is basically a legal entity where partners can enjoy limited liability protection. It combines aspects of normal partnerships with those of limited companies.

LLPs can get mortgages but it is treated a little differently, unlike a sole trader or a general partnership. The LLP liability is separate from that of its partners, so it’s only limited for certain kinds of commercial Buy to Let mortgages.

How are LLPs assessed by lenders and what mortgage criteria do they need to meet?

With LLP mortgages lenders look at how long the company’s been running, how financially secure it is and they also look at the individuals in the LLP. They’ll want to know their financial backgrounds and what assets they may currently own.

Different lenders assess it in different ways. It’s a really niche group of people who generally apply for mortgages with LLP, so the details can vary from application to application.

How is mortgage affordability worked out for an LLP and how much can someone borrow?

Generally speaking, if you’re applying in a company name, you’re looking at Buy to Let or a commercial mortgage. The borrowing is based on the rent from the property you’re buying and will be stress tested.

Different factors will come into it, including you as an individual, what you’re trying to do and potentially whether or not you have a property portfolio. But generally speaking, the sky’s the limit with how much you can borrow – it all depends on how much rent you can get for the specific property.

What deposit is typically needed?

Generally speaking 25% is the benchmark for most investment properties. When you’re financing these, most banks want to see a level of equity. If you default on the mortgage and they need to repossess the property, that equity allows them to sell it a little cheaper if needed.

Can an LLP with company debt apply for a mortgage? What happens if there’s bad credit with an LLP partner?

It will be significantly harder to get a mortgage under those circumstances, but it’s not necessarily impossible. There will be an assessment of the debt and the cash flow through the business.

Sometimes a bank will take a look at accounting projections for the year to negate any debt that’s already in place. If individuals in the partnership have bad credit, that may be assessed on a more personal basis.

If you have something considered a bit more serious like an IVA, bankruptcy or a CCJ, you may not be eligible to get a mortgage, just because of the potential risk involved with the whole process. For smaller and less serious adverse credit, they may still consider you. It’s done on a lender to lender basis – that’s the general theme when you’re looking for Limited Liability mortgages.

Can I get a Buy to Let mortgage as an LLP? 

Yes, an LLP can secure Buy to Let mortgages. Lenders assess the LLP’s ability to manage the property and the potential rental income. As long as it’s got a proper strategy and management plans in place, it will be considered. 

You can’t generally get LLP mortgages on residential homes because they are meant to be your home rather than a company property. LLPs are generally strategies for commercial or business purposes.

Does the same apply when it comes to remortgaging or are there differences?

It would work in the same sort of way. You can do a product transfer with some lenders – which means you don’t have to go through the assessment again. As long as there have not been any major changes and you’re not trying to take out extra funding, it’s straightforward. 

Otherwise, it would be a new application and they will reassess all of the circumstances around yourself, the company and any other changes over the period that you fix your mortgage for.

What else can influence eligibility to obtain an LLP mortgage?

When you’re looking at the Buy to Let market, it’s whether you’re a homeowner already – that will have an influence. Some lenders also have a minimum income requirement of about £20,000 to £25,000 a year. 

If you already own quite a few properties, they’re all mortgaged quite highly and there’s not much equity to spare, they could judge you a little bit more harshly on that. A lot of factors are taken into consideration when you are looking at buying this way. 

Do you have any advice for anyone currently going through this process? How can a mortgage broker help?

Some mortgage advisors, especially a company like ourselves, will specialise in Buy to Let. We also deal with the commercial elements as well. So speaking to a broker is something I highly recommend, because it’s going to determine the success of your application. 

We will understand what type of loan is best for you and how to push it through for you. We’ll also look at the alternative options. Each application is completely individual and when you’re doing something a bit more complex, it’s always best to speak to an expert to point you in the right direction. 

Otherwise it becomes a very complicated process and it’s not something that’s easily accessible online. Somebody with experience in the industry, who knows where to put you and can check the criteria, will make your application 10 times easier.


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