Limited Company Director Mortgages
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Limited Company Director Mortgages – finding a suitable deal
As someone running your own business, you know how good it feels to be in control. So it can be challenging when mortgage lenders don’t offer you the loans and rates you feel are fair.
Limited Company Director Mortgages and mortgages for the self-employed aren’t difficult to find, but it can take expert advice to locate the best value offers.
Can I get a mortgage as a Limited Company Director?
As long as you have a year’s profitable trading behind you, it should be fairly easy to find a mortgage. It is more difficult if your business is only a few months old – but not impossible.
The real challenge in finding a good mortgage as a Limited Company Director is locating a lender that sees your true value as a customer. A lender bases their loan amount on your income – but Company Directors often have a low salary and pay themselves additional dividends from the company.
Certain specialist lenders will base their loan on your company’s net profit, instead of salary and dividends, which can mean you’re able to borrow much more.
What deposit will I need?
You will always attract better mortgage deals if you have a good deposit. A 10% deposit is usually the minimum, while a larger deposit means a lower Loan to Value (LTV). Once you get below an 80% LTV – by having a 20% deposit or more – you gain more choice of both rates and lenders.
The most important consideration in working out your property budget is the size of the repayments on your mortgage: make sure they will be comfortably affordable.
What documents will a mortgage lender need?
All mortgage lenders will want to see your company’s trading history. There are a number of documents and details you might need for your mortgage application:
- Your last two years’ certified company accounts
- Tax year overviews
- Three months’ personal and business bank statements
- Self assessment forms (SA302)
Talk to your accountant with plenty of notice, so that they can gather the relevant information for you.
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We will work with you to understand your situation and needs, then develop personalised advice to help you achieve your goals.
Are there any risks with a Limited Company Director Mortgage?
There are a few situations that could make it more complicated to get a mortgage.
- Partnership structure – If your business is a partnership, lenders may base your loan amount on your share of the net profit. The size of your mortgage could end up less than you were hoping for.
- Changes in trading style – If you’ve changed business type in the past year, e.g. from a sole trader set-up to a limited company, this can be a challenge. Even if you have run your business as a sole trader for years, lenders will still see the limited company as a new business.
- You have bad credit – Anyone applying for a mortgage will have their credit score examined by the lender. Older adverse credit issues aren’t necessarily an issue, but they could mean you’re charged higher interest rates. Bankruptcy or unpaid CCJs on your file will make it difficult to get a loan.
- Business challenges – If your business has made a loss in the past 12 months, mortgage approval could prove difficult. But if you can demonstrate that you have robust plans in place to deliver retained profits in the months ahead, you may still get the loan.
Limited Company Buy to Let mortgages
If you’re interested in getting a Buy to Let mortgage, this is normally straightforward as long as you have at least a 25% deposit. Your income is of less concern to the lender with a Buy to Let. They will be more interested in whether the rent you will charge will comfortably cover the mortgage payments.
Some landlords now operate limited companies to reduce their tax bills, and you might wonder if you can buy a property through your own company. This is not the usual approach – most landlords create property businesses. It may be possible, though, so seek mortgage and tax advice.
How can a Mortgage Broker help with company director mortgages?
Mint has helped many company directors to find competitive mortgages and achieve their property goals.
We spend time getting to know you and exploring your unique circumstances. That way we can seek out the most suitable products across both high street lenders and more specialist companies. Our Mortgage Advisers even take care of your mortgage application, making sure you have all the documents you need, well in advance.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
We may charge a fee of up to £395 for mortgage advisory services and administration.