Limited Company Director Mortgages
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Limited Company Director Mortgages – maximise your borrowing
Limited Company Director Mortgages are fairly easy to find these days but getting a deal that meets your borrowing goals could take a little research. Let the Mortgage Co take the strain and explore your options.
Can I get a mortgage as a Limited Company Director?
Generally it is straightforward to find a Limited Company Director mortgage. Many lenders will ask to see two years’ accounting records, so it’s important to have all your documents ready.
Company Directors can sometimes find it challenging to find a lender that recognises their borrowing potential. This arises because it’s common practice for Directors to take a low salary and leave profits in their business.
Lenders use your income as the basis to calculate the loan amount. So, if they only consider your official ‘salary’, the loan could be much less than you are aiming for. Overcoming this means finding a lender that understands small businesses. Certain lenders will assess salary, dividends and retained profit when calculating resulting in a more appropriate sized mortgage.
Assessing Limited Company Director income
If you’re concerned, a good Mortgage Broker like the Mortgage Co will help you find a suitable provider. A specialist lender could look at any of the following to calculate your income:
- Director’s salary
- Latest years’ figures
- Operating profit (before or after tax)
- Other applicants employed by the company
- A bespoke report from a qualified accountant
Everyone’s financial situation is different and so some mortgage lenders will tailor a mortgage offer specifically to you.
How do I document my trading history?
Many mortgage companies will want to explore your company’s trading history to get an understanding of your business as well as your income. They might ask for a number of different documents as part of the mortgage application. These can include:
- Two or three years’ certified company accounts
- Tax year overviews
- Three months of personal and/or business bank statements
- Self assessment forms (SA302)
Lenders will also examine your credit score. Bad credit history won’t necessarily affect your chances of a mortgage, although it does depend on the severity of the issues. You could have a narrower choice of lenders and only be offered higher mortgage interest rates.
Is fluctuating income an issue?
Most business owners see a lot of fluctuation in how their business is doing on a month by month basis. You might also take varying amounts out of your company depending on its cashflow.
Many lenders are understanding about this and they will calculate an average performance over two or three years’ to reach an overall income figure.
If your business has reported a loss in the past year or so, you may need to provide an explanation for this. It will help to describe what you have done to drive improvements. Evidence of new contracts and any recovery in profits will also be useful. A Mortgage Advisor can suggest a suitable approach for your specific situation.
How much deposit will I need?
Having a larger deposit gives you a better opportunity to obtain a suitable mortgage deal. If you can contribute 20% or more you’ll have a wide choice of lenders and potentially be offered better interest rates. That said, it’s possible to get a mortgage with just 5% deposit if you have a good credit rating.
As part of the mortgage process we will explore how your deposit will affect monthly repayments, set your property budget and discuss mortgage types.
How can a Mortgage Broker help with Company Director mortgages?
Exploring Limited Company Director Mortgage deals takes time, especially if you want to find a competitive deal. At the Mortgage Co we support all kinds of clients to achieve their property goals, including sole traders, company directors and partnerships.
We’ll spend time getting to know you and your business before looking at mortgage products across high street lenders and specialist providers. In addition, some providers only offer certain mortgages via Mortgage Advisers. We help you apply for a mortgage and check that you have all the documents you need.
We are authorised and regulated by the Financial Conduct Authority so contact our registered office in Leeds today to find out how we can help.