Analysis from Private Finance has found that a limited company borrower could be expected to pay 3.41% for a two-year fixed 75% LTV mortgage deal, compared with 1.92% for personal borrowers.

Landlords investing through a limited company are excluded from recent tax changes. 

This means the amount of finance costs higher-rate taxpayers can deduct from their rental income before calculating their tax bill is gradually being phased out.   

This process will be completed by April 2020. 

However, for some landlords, the high cost of limited company mortgage borrowing could outweigh any tax advantages. 

Research by Private Finance has claimed that only landlords with multiple properties will receive an advantage from a limited company structure, with four properties being the tipping point.

Landlords looking to repurchase existing homes into a limited company could also lose out as this move could trigger costly capital gains and stamp duty taxes.

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The research suggested that it was cheaper for new landlords buying one investment property to do so as an individual rather than through a limited company.

Shaun Church, director of Private Finance, said: “The option to invest through a limited company has come under the spotlight recently as landlords look for ways to offset recent tax changes.  

“But landlords shouldn’t rush into this assuming it’s a safe bet for saving money.

“Limited company mortgage products are available through a handful of smaller lenders, resulting in higher rates compared to personal borrowing. 

“Investors need to drive down mortgage costs as much as possible to prevent this from eating into their profits.

“Larger landlords might find the tax benefits associated with limited company ownership outweigh the higher cost of mortgage borrowing. 

“Landlords should ensure they seek professional advice on how best to maximise their profits.”