If an individual (sole trader) owns a property which they live in and borrows money on their primary residence via a mortgage to invest the money into an Investment or development Property to either rent (investment) or to sell (trade) then I believe the interest is deductible for Self Assessment Tax at least for the investment option and I assume for development too? However if the person does the same in terms of borrowing on their own home mortgage to then lend to a Limited company to either invest in or develop to sell (as a trade) Property is the interest paid on the home mortgage deductible as a cost within the Property company (which the individual lends to the company.
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Businesses and trades
To obtain interest relief as a deduction in calculating the profits of a business the loan must have been applied wholly and exclusively for the purposes of the business - there is no restriction on the amount of relief available unless the cash basis is elected for in which case the deduction would be limited to £500. This is because the rules that used to be found in Schedule DI and II were extended to property businesses in the 1990's.
However where a loan is used to buy an interest in a partnership or a close company, or to make a loan to such a partnership or company the interest is relieved as a charge, a deduction against total income and the partnership or company must be carrying on a trade, profession or vocation - which would exclude property investment but not property dealing or development. These rules were not changed in the 1990's. The relief for interest paid is subject to a limit of £50,000 or 25% of income together with other uncapped income tax reliefs by FA2013.