Getting a mortgage as a self-employed company director can be tough. The choice of lenders can be limited depending on your circumstances and company history, and you will undoubtedly face more stringent eligibility criteria and financial checks.
Goldmanread champions small businesses and is committed to helping you secure the best mortgage tailored to your financial situation. Whether you are a first-time buyer, remortgaging, moving home or exploring buy-to-let, our knowledge of mortgages for company directors will help you unlock the doors to your next property.
Talk to us today about company director mortgages.
Can I get a mortgage as a company director?
Yes, you absolutely can get a mortgage as a director of a limited company. The idea that directors can only be approved by specialist lenders is becoming a thing of the past. Many mainstream lenders now offer competitive mortgages to limited company directors, recognising the strength and growth of the self-employed sector.
Although, there are circumstances where a specialist lender may be more suitable, e.g., if your business is less than two years old.
How do mortgages for limited company directors work?
The process of getting a company director mortgage is much the same as it is for traditionally employed applicants, the difference being in the way you are assessed.
Most lenders base your mortgage borrowing capacity on your company’s net profits, salary, and dividends rather than relying solely on payslips and personal income like salaried employees.
How do mortgage lenders assess limited company directors?
Let’s take a look at the typical eligibility criteria for limited company director mortgages:
Personal income
Many lenders will take an average of your salary and dividends over the last two to three years. Some also consider retained profits within your limited company, as well as your company’s net profits and future income projections.
Trading history
Most lenders will only consider you if your company has at least two year’s trading history. This provides them with evidence of the stability and profitability of your business. A strong trading history with consistent company profit will improve your chances of securing a competitive mortgage deal.
However, some specialist lenders may consider you with just one year’s trading history.
Net profit
Your company’s net profit significantly affects your borrowing capacity. The healthier your company’s net profit, the higher the potential mortgage offer from lenders.
Deposit
The size of your deposit is key to the range of mortgage products you can access. A larger deposit typically allows you to access better interest rates and more favourable lending terms.
Personal finances
As with any mortgage application, lenders will review your personal financial situation, including credit history, existing debt, and personal bank statements. This is to ensure you can manage the mortgage repayments.
What documents do you need to supply for company director mortgages?
Along with proof of ID, address and your deposit, you may be asked to supply the following documentation:
- Full limited company accounts for the last two to three years.
- SA302 forms and tax overviews from the last two to three years.
- Personal bank statements from the last three to six months, showing your income and expenses.
- Company bank statements to provide evidence of the business’s financial health.
Are there specialist lenders for company directors?
Many mainstream banks and building societies are now willing to lend to self-employed applicants. However, there are specialist lenders whose lending criteria are geared towards company directors.
A specialist lender is likely to be more flexible about complex or irregular incomes, bad credit history or applicants who have declared company losses in the past.
Some even accept directors with only one year of trading as long as there is evidence that the company will be profitable in the future. However, this flexibility often comes with higher interest rates or fees.
By working with an experienced mortgage broker like Goldmanread, you gain access to these lenders and secure the best deal for your specific circumstances.
Looking for a company director mortgage? Contact Goldmanread today
If you are a limited company director searching for a mortgage, you could benefit from working with a specialist broker from Goldmanread. Whether you’re applying for the first time or have encountered challenges with past applications, we will work tirelessly to secure the right mortgage deal for you.
Contact us today to get started.
