Limited Company Director Mortgage
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Can I get a mortgage if I am a Limited Company Director?
As a Limited Company Director, it’s perfectly possible to get a mortgage. Your application will be assessed as a self-employed applicant, which the vast majority of lenders in the UK are now happy to accommodate. Other than having to provide more extensive proof of your income as a business owner, there is no difference in the application process and you’re equally as likely to secure a mortgage, so long as you meet the affordability criteria.
Whilst you have access to a wide variety of high street lenders, there are independent lenders that specialise in self-employed applications, who may be able to offer more competitive mortgages for Limited Company Directors. We can help you to find those lenders who are more accommodating to your trading style.
How do I document my trading history?
There can be some slight variations in lender requirements in terms of what type of documents that they will ask for, however, overall, they will be looking to establish that you have maintained your business at a relatively stable level of income over a period of two to three years.
Some specialist lenders will consider applicants with just one year’s trading history and only a single year of accounts available, however, this is likely to increase the interest rate on their lending. You may also need to provide extra evidence of stability, such as projected future income.
As a self-employed applicant, you have the advantage of, to some degree, tailoring your application to ensure that you fulfill lender criteria before you apply for a mortgage. By visiting Mortgage Brokers like ourselves ahead of your application, you can find out what the requirements will be and then spend some time preparing the documentation.
It’s a good idea to keep full and current accounts for the years preceding your application, have your accounts certified by an accountant, in the event that you would not usually employ one. Keep on top of your tax returns and try to maintain or increase your income year on year.
Limited Company Directors payslips from your own business may not be considered PAYE income for the purpose of a mortgage application and may not be sufficient evidence of personal income.
Most lenders will consider your personal salary and dividends as income in support of a mortgage application. It can, therefore, be beneficial to consider taking additional dividends in preparation for your application, to increase your overall annual income. This can give you access to a larger loan, if necessary.
There are lenders who will also consider your retained net profit, and we can help you to decide which lender assessment criteria will be most beneficial to you.
How do I prove my income?
In order to provide proof of income for the duration requested by the Mortgage Lender, which is most commonly two to three years, you will need to submit the following documents to cover that period:
- Certified accounts
- SA302 (Tax Calculation Form) self assessment tax returns
- HMRC tax overview
- Business bank statements
What if I have fluctuating income?
Unless your business has seen a continuous decline in profits, some fluctuation is expected with a self-employed income. Lenders gather a more substantial trading history precisely to obtain a clearer picture of your long term income pattern and mitigate the risk of a fluctuating income, which is expected.
If your profits have declined continuously, most lenders will base the loan only on your most recent year’s trading figures.
What deposit will I need?
Self-employed mortgage applicants will not need to provide a higher deposit than other applicants, so the minimum deposit requirement will be between 5% and 10%, depending on the mortgage product.
Whilst not a requirement, offering a larger deposit will improve the strength of your application and open up more competitive mortgage rates to you.
How can a Mortgage Broker help?
Here, at Mortgage Advice Centre, we specialise in helping self-employed applicants and business owners make the most of their mortgage options. We have access to competitive deals from a wide range of lenders, including those niche firms who will consider more complex circumstances.
We also understand how business owners have minimal time for additional stress, so we’ll help you prepare thoroughly for a smooth and successful application, taking on any of the administrative burden that we can to simplify the process for you.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.