Company Director Mortgages Explained
As a Company Director, you might be wondering what is the process for a mortgage application.
Often the way you pay yourself means that high street lenders won’t consider you for mortgage applications. But we can help.
You might be worried about the following:
- You only recently set up your Company
- The amount you have paid yourself over recent years has not been consistent
- You have been declined for a mortgage by a high street lender
- You are unsure how to present your income to a lender
Whatever your concern, we can help. As a Company Director, it can be more challenging to apply for a mortgage but by no means impossible.
We know what documents you need to provide to the lender to prove your affordability. We also have relationships with specialist lenders who are more likely to accept applications from Company Directors. We also know how to package your income to maximise the likelihood of a successful outcome.
By using an experienced mortgage adviser like us, we can help guide you through this whole process and help make it as stress free as possible.
Contact us today for Mortgage Advice for Company Directors.
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.
There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.
What documents do Company Directors usually need for a mortgage?
As with all mortgage applications, the mortgage lender will want to see evidence that you earn enough to be able to afford the mortgage. The way you do this will be different from most self employed people as you probably take salary and dividends.
So you need a broker who can find you a lender that will take into account both salary and dividends.
It depends on which lender you choose as to how they calculate your affordability. Generally, they will take an average of your income over the last two or three years. But they can take other factors into account as well.
To prove your income when you apply for a Company Director mortgage, you will generally need to provide:
- Limited company accounts – the last 2-3 years is ideal, but this can be less
- Payslips showing your PAYE income – generally this will be for the last 12 months
- Evidence of the dividends you have paid yourself
- Business and personal bank statements – which will assess affordability and also salary being paid into your personal account
At Your Mortgage Expert, we can help pull all this documentation together and ensure the lenders have all the information they need. We can also give advice if you only have 1 year of accounts or have recently set up your company.
How lenders may assess company director income
One of the biggest questions for company directors is how a lender will view the income taken from the business. This can vary quite a lot from one lender to another.
Some lenders may focus mainly on salary and dividends. Others may be more willing to look at the wider picture, including retained profits in the company where appropriate. The way your income is assessed can have a significant effect on how much you may be able to borrow.
This can be especially important if you:
- Pay yourself a relatively low salary
- Have dividends that vary from year to year
- Have retained profits in the business
- Are a PAYE company director
- Have a company that is relatively new
The right lender choice can make a real difference, particularly where your income does not fit neatly into a simple employed application.
Why use Your Mortgage Expert for Company Director mortgage advice
Company Director applications can be more detailed because lenders do not all assess limited company income in the same way. We help make the process clearer and more manageable.
- Clear advice on salary, dividends and company accounts
- Help understanding lender criteria and required documents
- Support for newer and more established limited companies
- Guidance where income is not straightforward
- Help from enquiry through to completion
Whether you are buying your first home, moving house or remortgaging, we can help you understand what may be possible.