A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
Mortgages for Limited Company Directors
When applying for a mortgage as the director of a Limited company in the UK, it is crucial to have all of your paperwork in order and to go into the process as prepared as you can possibly be. It can be much more complicated to apply for a mortgage as a company director than for a standard self-employed mortgage.
Can I Apply for a Mortgage as a Limited Company Director?
Yes, it is still possible to apply for a mortgage if you are a company director. It is, however, more complex than an everyday mortgage application and should be approached with this in mind. It can feel overwhelming when trying to navigate the different available options, so it is vital that you receive the correct advice and are empowered to make the best decision available based on your circumstances.
How much Should I Save as a Deposit?
Generally speaking, the more of a deposit you have saved, the less risk the specialist lender will have to take on you. A higher deposit of between 15 – 30%, coupled with a good credit history, should be enough to allow you to access some of the better deals with most of the mortgage providers who cover this area.
If you don’t have a good credit history or only have access to a limited trading history, saving a larger deposit may be the difference between being accepted for a mortgage product and being refused.
How Will a Mortgage Lender Assess My Income?
How your income is assessed for a mortgage as a Director of a Limited Company will differ markedly from how it would otherwise be considered in a more typical mortgage application.
It is essential to know that, in most cases, a non-specialist lender would only consider the money you directly withdrew from the business as your income. If you earned £40,000 in salary and dividends, this is all that would typically be considered when calculating affordability.
A specialist lender can also look at your share of the company’s net profit, which could enable you to afford a much larger mortgage, depending on the company’s established performance and your share of ownership.
What Proof of Income Do I Need to Provide as a Limited Company Director?
Three months of bank statements should generally be sufficient to prove your income in a mortgage application situation.
Lenders will also require to see either SA302 year-end tax calculations from HMRC, or your own finalised accounts for the year. Some specialist lenders will ask to see both, so you should ensure that both options are available when you apply.
In addition to these, when you provide full sets of accounts for multiple years of trading, this should help the specialist lenders to build their understanding of your business and increase their likelihood of offering you a mortgage with favourable terms.
Your Mortgage Experts
- At Your Mortgage Experts we specialise in arranging mortgages for business owners and Limited Company Directors, as well as Sole Traders, Self-Employed Contractors, and Limited Liability Partnership.
- We work with accountants regularly, with the knowledge and experience to understand your company accounts, how you receive your income, and the value that your business generates.
- We have the expertise to present your business accounts to a mortgage underwriter in the correct way.
- We can get you a mortgage not just based on your salary and dividend but also looking at the net profit of the business.
- We have access to 1000s of mortgage product deals from a large number of mortgage lenders, including specialist lenders that best understand the more complex needs of business owners and limited company directors.
- You will not get this expertise if you just approach your local bank or try to find your own mortgage online. To request a free consultation with one of our expert advisers call us today on 020 8154 1111.
Or drop us a line: email@example.com
Your Mortgage Experts, London W9 2HQ.
Luca BertolinoMortgage Expert
Your Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.