Limited Company Director Mortgages Made Easy

As a limited company director, when it comes to applying for a mortgage, the information a mortgage lender expects you to provide, isn’t as straightforward as it is for an employee.  Our guide to Limited Company Director Mortgages, will help you discover the easy way to apply for a mortgage.

Can I get a mortgage if I am a Limited Company Director?

Yes – there are a number of lenders who welcome applications from company directors. However, these are specialist lenders, who only offer mortgages through specialist brokers, so not the usual high street lenders you’ll be familiar with.  

To find out who these lenders are and what they expect, speak to an experienced specialist broker for mortgage advice specific to limited company directors. We recommend only approaching mortgage advisers that can prove they are authorised and regulated by the Financial Conduct Authority (FCA). Check the FCA register to see if they are authorised and registered.

How do I document my trading history?

A lender will want to see how well you run your business, so one of the first things they will ask to look at is your finalised limited company accounts. On application, lenders will expect you to have been trading for a minimum of 12 months.

If your trading year straddles two tax years, some specialist lenders will accept 12 rolling months as an indicator of how much you can afford to borrow.

As well as showing your profits and the amount you’ve taken in salary and dividends each tax year, your accounts will help the mortgage lender predict your future income.

Before arranging a call with a Mortgage Broker, here’s a checklist of information to get ready beforehand.  A good broker will advise you on the information you have and guide you if there is anything else you will need to gather.

• Your latest finalised limited company accounts
• Operating and retained profit
• Payslips
• Record of dividends you’ve drawn down from the business
• Last three months business and personal bank statements
• Reference from your accountant

As well as your business credibility, a lender will also want to know how well you conduct your personal finances. 

At this stage, prior to applying, it’s important to look at your online credit files to see if they contain any adverse credit records. This is what a lender will do to find out if you are likely to pose a risk. 

If you do have any late payments, defaults or anomalies recorded on your file, you have time on your side to sort it out.  So pay off any unpaid debt, or find out why old paid-up debt hasn’t been removed.

What about:

• PAYE Income?
  Most limited company directors will take a basic director’s salary up to the  £12,570 annual income allowance before tax.  This is a tax efficient way of paying yourself.  A specialist mortgage lender will take this into consideration as part of your affordability calculation.
• Dividends?
  After your basic salary, the amount you’ve drawn down as dividends in each tax year will be included as your income calculation. The higher dividend value you have paid yourself, the larger your borrowing potential.

• Retained Profit?
  The majority of high street lenders don’t always factor in retained profit as income, as it’s money retained in the business for the business.

  However, a specialist mortgage lender that understands how limited director income works, will include retained profit, as they recognise it is your money to access if you need to.

How do I prove my income?

Your finalised limited company accounts, your latest HMRC SA302 and a reference from your accountant should be enough to prove your income.

These three important pieces of your mortgage application jigsaw will show how much dividend and salary you paid yourself during the last 12 months and how much profit is retained in your business.

You will also need to provide your business and personal bank statements for the last three months.  These will show money paid out of your business account into your personal account.

What if I have fluctuating income?

It’s natural for some businesses to have peak periods and slow troughs.  It may be that your business is seasonal, so you have a higher turnover during Easter, Summer and Christmas. 

It’s important to discuss fluctuating income with a mortgage adviser. By explaining why your income fluctuates, a lender will be able to factor this into your affordability assessments.  

What deposit will I need?

The majority of lenders will accept 15% as a minimum deposit. Obviously the larger deposit will open the doors to a higher borrowing level and lower interest rate. However if your business and personal credentials are robust, there are specialist lenders that will offer a 95% loan to value (LTV) ratio.

How can The Mortgage Advice Centre help?

At the Mortgage Advice Centre, we are proud to help limited company directors get the go-ahead on the mortgage they need for the property they want to buy. 

We are good at saving our customers time and money – so you can leave us to get on with processing your mortgage application – while you remain focused on your business.

Our service includes:

• Introductory appointment, where we find out more about you, the property you want to buy and how much you want to borrow. 
• In-depth fact-find
• Document compilation and application form completion
• Lender selection
• Application submission on your behalf
• Frequent updates
• Ongoing liaison

All you need to do is let us know you’d like to set up an appointment via our website contact form.  We look forward to meeting you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.