Mortgages For Company Directors
Company Director Mortgages topics covered
- Can I get a mortgage if I’m a company director?
- How long does my business need to have been trading to get a mortgage?
- What income can I use for my mortgages for company directors?
- Can I borrow based on my company retained profits
- How much deposit will I need for a mortgage for company directors
- Mortgage for a company director with bad credit?
- Can I remortgage?
- Can I get a buy-to-let mortgage?
- Borrowing more using my latest years self-employed figures?
- Speak to a mortgage for company directors’ advisor
Company Directors Mortgage Advisors
Our Mortgage Experts Online accredited advisors are specialists in mortgages for company directors. Furthermore, our expert’s knowledge will help you to find the right mortgage for company directors on the market.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there. As a result, this may feel completely overwhelming to you and you may have no idea where to start. We can offer you guidance and help you navigate the complex world of mortgages for company directors.
In addition, the brokers we work with are whole of market and offer completely unbiased advice, ensuring that you get the absolute best deal available.
Scroll down for more information and FAQ’s about mortgages for company directors.
Can I get a mortgage if I’m a company director?
Mortgage for company directors are assumed to be easy to achieve, in reality it can be more difficult. Mortgage lenders see self-employed borrowers as perceived higher risk. In some instance company directors will need to be trading for a minimum 3-year period. The majority of high street lenders require a minimum 2-year trading, however, there are specialist lenders who will look at 1 year trading history.
The way you declare your income is different to someone who is employed, lenders will want to see either.
- Tax calculations & tax year overviews
- Certified company accounts
- Accountant’s certificate.
If you own more than 25% of the shareholding you will be classed as self-employed and will be treated accordingly. Some lenders will treat you as employed if you own less than 30% shareholding. For mortgages for company directors each lender has their own criteria.
How long does my business need to have been trading to get a mortgage?
Minimum 12 months history will be required by a specialist lender. Most high street lenders will be looking for 2-3 years of trading history. Specialist lenders will work off 12 months trading history. Due to the increased risk the minimum deposit level for this is 15%. With mortgages for a company director the sustainability of the business will be a big factor in any lending decisions Subsequently, the more established the business the easier it is to prove sustainability. Therefore, providing all company information from the outset is vital.
Certain professionals will be eligible with less history, such as a doctor who may have joined a practice which is already operational. There are options where a lender would take 1 year’s accounts and a projection from the accountant.
When you are setting up a new company, you can check the availability of the company name by clicking here
What income can I use for mortgages for company directors?
Most accountants will advise to take a salary up to the tax threshold and then dividends for any other income. The reason for this is to reduce the amount of tax to be paid. However, some directors will take all earns as PAYE.
Dividends are subject to lower tax liability than employed income. This is the way most company directors show their income and is the most widely used method by mortgage lenders to calculate affordability.
Can I borrow based on my company retained profits?
The main issue around achieving a mortgage using retained profits is the high street lender will focus on the money you’ve taken personally in the form of director salary and dividends.
Therefore, company directors get frustrated and are turned down or cannot borrow the amount they need.
Certain specialist lenders will work from profits retained in the business. However, they will generally only look back at the previous 12 months history. This can significantly increase the borrowing potential for self-employed company directors.
Using the services of a mortgage expert is essential in helping you find a suitable lender who will look to at the retained profits.
How much deposit will I need for a mortgage for company directors?
Every self-employed mortgage will be assessed on its own merits, and the amount of deposit will therefore vary. For a mortgage for company director the more deposit the less perceived risk for the lender.
- Time company has been trading.
- Credit profile of the applicant.
- Property price.
The deals available will be the same regardless of if you are employed or self-employed, and as with any application the more deposit you have the stronger the case will look to a lender.
As a rule, if you have been trading for 12 months then you will need a minimum of 15% deposit, if you have been trading 2 years or more there are options at 10% if your credit profile is strong enough.
If you have a 5% deposit and a first time buyer, you may have options on the Help to Buy scheme.
For the latest criteria speak to one of our mortgage experts on 0300 124 5655
Mortgage for a company director with bad credit?
Yes, it is possible and will be assessed on how severe & recent your adverse credit is, this is the same if you’re employed or self-employed. The more severe the adverse, the more deposit will be required by the lender and the higher the interest rate will be.
Mortgages for company director lenders will look at the overall case and make a decision based on the overall risk.
Can I remortgage?
You can remortgage with mortgages for company directors. You might have been originally employed when taking out the mortgage and are now self-employed. Our experts will be able to explain all the options available around mortgages for company directors.
If you aren’t eligible for a mortgages for company directors, then a product transfer might be the answer. To read all about remortgages click here.
Can I get a buy-to-let mortgage?
The criteria for a mortgage for company directors buying a buy to let is simpler. Most lender only require 12 months trading history and evidence in the form of tax calculation & tax year overview.
Some lenders will have a minimum income figure. For the most up to date information contact us today. To read all about buy to let mortgages click here.
Can I borrow more using my latest years self-employed figures?
Companies can at times file low profits for any number of reasons such as set up costs in the first year of trading, or investment in new plant/machinery to expand a business. This can hugely affect a director borrowing potential through a lender who averages over 2 or 3 years worth of accounts.
Some specialist lenders can work off the latest year’s figures, however there will need to be a rational explanation to why there have been lower figures in the previous year’s trading. The accountant can normally provide any information the lender may request through an accountant’s reference Let’s have a look at an example below and use a multiple of 5 x income. £15,000.
- First year profit £15,000
- Second year profit £20,000.
- Third year profit £40,000.
Mainstream Lender £23.333 x 5 = £116,666 Average of the last 3 years profits.
Mainstream Lender £30,000 x 5 = £150,000 Average of the last 2 years profits.
Specialist lender £40,000 x 5 = £200,000 Latest years profits.
You can see the difference using the correct the lender could have on your potential borrowing.
Mortgages for company directors are complicated and need experienced and expert advice. This will ensure you get the borrowing you require at the best possible rate, and that your application is presented in the best way possible to the lender.
Speak to a mortgage for company directors’ advisor.
There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or cannot borrow what they need. However, just because one lender has declined you, don’t give up.
Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.
Therefore, the expert brokers we work with have experience in dealing with all aspects of company director mortgages, and coupled with using the whole of the market to access the very best deals available.