Limited Company Director Mortgage
- Access to competitive rates and some you can't get direct
- Specialist Mortgage Advisers
- Free initial consultation
What's On This Page?
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.
Get In Touch
Limited Company Director Mortgage (Part 1)
Peter Matthews explains how the mortgage process works if you are a director of a limited company.
How does the mortgage process work for a limited company director?
The process is very much the same for the employed, self-employed and limited company directors. Some people believe that because they take a salary from their limited company, they can use that salary as their income, but it’s not as simple as that.
When you’re a director of a limited company and you own more than 25% – or even down to 15%, with some lenders – you are regarded purely as self-employed.
The company is then looked at as the source of income. The lending is based on your percentage shareholding of the company and the income derived from it. So it is a little bit more complicated, but an advisor will see you through the process and explain how best to present your income to a lender.
Are there any specific mortgage products designed for limited company directors?
All products are available for limited company directors. Some lenders do specialise in the self-employed and limited company directors, and have a wider approach to accepting income. As an advisor, it’s my job to find the most suitable lender for any circumstances.
Limited companies can have differing shareholdings. You could each own 50% between yourself and your partner, or there may be a number of shareholders who each take a separate income.
Part of our advice is finding the best way of presenting your individual circumstances to the most appropriate lender for you. Back to the original question, almost every product available to an employed client will also be available to a limited company director.
Do many lenders offer mortgages to limited company directors?
Almost all of them. There are no limitations for limited company directors. They’re a very good source of business for lenders. There are a lot of products available and more lenders coming to the market all the time.
What are the eligibility criteria for obtaining a mortgage as a limited company director?
It’s very much the same for all self-employed people, including limited company directors. Typically, lenders want at least two years’ accounts, tax year overviews and tax calculations to assess the income of a limited company director.
That’s a positive because as a limited company director, you may decide to take your salary and dividends – but there may also be profit retained in the company that you decide not to take. Some lenders will take that as available income in calculating what they’ll lend to you.
What documents are typically required when applying for a mortgage as a limited company director?
You’ll need your tax year overviews and tax year calculations for the last two years, and also the business accounts for the same period. The lender will then have a full idea of all the income available to you.
Speak To an Expert
Our job is to provide you with the expertise and knowledge to find you the most appropriate solution. Whether you’re investing in property or looking to buy your first home, our mortgage advisers can help.
How do lenders assess the income for a mortgage for limited company directors?
It is different, because it’s not just one form of income. You’ll typically have a PAYE salary and then dividends from the company’s profit. There could also be retained profit, which can also be used as available income for the assessment.
Some lenders will also look at depreciation and add it back in. An advisor will take the information you provide and find the most appropriate lender for you, because each lender will look at your income differently.
Some lenders specialise in the limited company director arena, and potentially could lend you more than your standard high street lender.
How do lenders view dividends and retained profits when considering an application from a limited company director?
We’ve just explained how that works. You’ve got retained profit and there are lenders that lend against gross profit. It’s an advisor’s role to find the most appropriate lender for you.
Can I still get a mortgage if I have a limited trading history as a company director?
Typically the minimum is one year as a limited company director. Certain lenders will accept you after one year of full accounts, tax year overviews and tax calculations. So having been a limited company director for a relatively short period won’t stop you getting a mortgage.
Are there any advantages or disadvantages to getting a mortgage as a limited company director rather than sole trader?
A sole trader will be assessed purely on net profit because that is seen as the income. A limited company director can include salary, dividends or retained profit as well.
There are no disadvantages at all as a limited company director.
Are there any restrictions or limitations on the types of properties that can be purchased with a limited company director mortgage?
On a residential basis, there aren’t any restrictions. Be aware that a mortgage lender won’t lend against a property you’re using for business purposes. If you’re operating with an office at home, that’s fine. But if there’s a manufacturing or warehousing element, that becomes a commercial mortgage and is underwritten completely differently.
You’ve demonstrated how a mortgage broker can help – have you got anything else to add?
Only to reiterate that there are lots of lenders out there, and some specialise more for the self-employed and limited company directors. Others use almost a conveyor-belt, computer- says-no approach.
An advisor is of paramount importance in finding the most appropriate lender for you, with the best achievable rate.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
Why Choose Fort Advice Bureau LTD?
- Our experienced Management Team has over 50 year's worth of combined knowledge in the mortgage industry.
- We can quickly assess your needs and compare the most suitable products to find you the most suitable deal.
- With an honest, transparent and consultative approach, we are 100 per cent focused on delivering a first-class service every step of the way.
- We build strong, long-lasting relationships with lenders and are not reliant on a computer-generated response.
Fort Advice Bureau is a directly authorised, independent, Mortgage and Protection brokerage which is simply the best way to operate. We are looking for experienced mortgage and protection advisers across the UK, to become part of our business. You will already be self-employed or looking to become such, no monthly fees, and a competitive flexible package. We are an easy-going and friendly firm which you can confirm by asking any one of our advisers.
Telephone: 01245 203495
Email: FAB@fort-ab.co.uk
