Limited Company Director Mortgages
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Limited Company Director Mortgages Explained
It’s not difficult to get a mortgage as a Limited Company Director, but sometimes it can be tricky to borrow as much as you’re hoping for. The Mortgage Centre is here to find you the right mortgage to achieve your goals.
Can I get a mortgage as a Limited Company Director?
Limited Company Director mortgages are fairly easy to find, as most lenders are well adapted to take on small business owners and the Self-Employed.
A key part of getting a mortgage is confirming your income, as lenders base your loan amount on this figure. Sometimes Company Directors struggle to hit their full borrowing potential, because they deliberately take a low salary and leave profits in their business.
Some lenders will only consider your official ‘salary’ as income – in which case the loan amount may be less than you are aiming for. You can avoid this, however, by seeking out a lender that understands small businesses.
Depending on your situation, you should find mortgage providers who look at salary, dividends and retained profit to calculate your loan – which should mean you get a bigger mortgage offer.
How do lenders assess Limited Company Director income?
There are many different factors that lenders might take into account in calculating your income. These can include:
- Director’s salary
- Tax return
- Company accounts
- Operating profit (before or after tax)
- Other applicants employed by the company
- A bespoke report from a qualified accountant
Often the documents that a lender requests will depend on your trading style. For Self-Employed mortgages you will often need to supply tax returns, while company directors usually need two to three years’ accounts.
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We’re able to tap into our local knowledge to guide you through your house purchase in your chosen area.
How do I document my trading history?
A lot of mortgage lenders will request details of your company’s trading history. The purpose of this is to help them understand your business and how it’s performing. Various documents are often submitted as part of the mortgage application, including:
- Two or three years’ certified company accounts
- Self assessment forms (SA302)
- Tax year overviews
- Three months of personal and/or business bank statements
The vast majority of lenders will look at your credit record too. While you can still get a mortgage if you have bad credit, it usually means you have to pay higher mortgage rates. You will often be restricted to a few specialist lenders, too, which might affect your borrowing capacity.
Is fluctuating income an issue?
A certain amount of fluctuation is normal for small businesses. Many companies see their income rise and fall over the year, and some years are more profitable than others.
To account for this, lenders tend to calculate an average performance over two or three years to reach an overall income figure.
Bear in mind that a recent loss on your accounts can be a warning sign to a lender, so you may need to explain the cause and the steps you are taking to prevent future losses. It helps if you can show evidence of your plans as well as new contracts or clients.
How much deposit do I need?
While it’s possible to buy a house with just a 5% deposit, the more you can contribute the better. Saving up 20% or more of the asking price will give you the best choice of lenders and lower interest rates.
Your Mortgage Adviser will illustrate the benefits of larger deposits and how they can reduce monthly repayments, as part of the discussion with you about your mortgage options.
How can a Mortgage Broker help with Company Director mortgages?
Getting the most competitive Limited Company Director Mortgage deals takes research. We work with clients in all kinds of situations to find the most appropriate mortgage products. Our customers include sole traders, company directors and partnerships.
By exploring your personal and business situation we can take an informed look at mortgage products across the market. In addition to the usual high street lenders, there are many providers who only sell through Mortgage Advisers. Once you’ve selected your preferred deal we will help you apply for a mortgage and check that you have all the relevant documents ready.
The Mortgage Centre is an Appointed Representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority. Contact our registered office in Haverhill for an initial chat today.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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