Limited Company Director Mortgages
Get in touch for a free, no-obligation chat about how we might be able to help you.
What's On This Page?
Get In Touch
Mortgage Advice for LTD Company Directors
Our Advisers understand the structure of how Company Directors are paid either through salary, dividends or company profits.
Our role is to secure the right solution for you, based on your income structure, we work in conjunction with your accountant to obtain what we need to get your company director mortgage approved.
Specialist COMPANY DIRECTOR Mortgage Advice
Our mission at Home Group Financial is to eleviate that stress and make it hassle-free as possible.
Where We Can Help
Please see below a number of scenarios where we help Directors of companies secure mortgages.
working with your accountant
We work alongside your accountant to obtain the necessary documents lenders require in order to have your mortgage approved. This saves you time, hassle pulling together the detail and ensure we get the right thing, first-time.
understanding your income
Our Advisers understand how to read your company accounts and tax returns to pull the required information we know lenders need in order to establish your income – this ensures a speedy, smooth approval process at application stage.
limited company net profit mortgages
Across our comprehensive range of mortgage lenders, we have mortgage lenders that are able to work from company profits. Therefore, if you are not drawing all you can via dividends from the business that you are entitled to, and therefore not showing a high-income – we can work with mortgage lenders that will look at the broader picture when establishing your overall company net profits.
one year accounts self employed mortgages
If you only have one year self-employed accounts, we have mortgage lenders that are able to lend on this basis. We work with the mortgage lender to ensure the case is fully packaged and presented in the best possible light with the necessary projections from your accountant to secure the most suitable mortgage solution.
Learn more about your LTD Company Director Mortgage options
Our Mortgage Advisers understand Company Directors and Professionals income types as well as working closely with lenders that offer Bespoke Underwriting giving you a hassle-free experience.
LTD COMPANY DIRECTOR MORTGAGES – FAQs
Yes is generally the answer for this. However it can depend on your shareholding in the business, if you have a shareholding of less than 30% there are some lenders that will still treat you as an employed applicant and able to base the mortgage on PAYE income.
If you are a major shareholder i.e. over 30% then the majority of lenders will treat you as self-employed and work from salary and dividends over the last 1-2 years. There are some lenders able to work from the company net profit if you are not drawing the total profits from the business, this can in some instances be a more favourable affordability assessment.
Mortgages for company directors generally function like any other mortgage application, where success depends on demonstrating that you meet the lender’s risk criteria and can comfortably afford the repayments.
The challenges often arise because many lenders, especially high street ones, tend to take a limited perspective when evaluating affordability and eligibility for self-employed individuals. This cautious approach to risk can sometimes lead to loan rejections, even if you are confident in your ability to make the payments. However, numerous specialist lenders offer a more flexible and practical assessment process for directors seeking mortgages.
Lenders do not necessarily charge higher interest rates for self-employed or company director mortgages, it’s a matter of satisfying the lenders criteria.
In some instances depending on the circumstances of the self-employed client, we may need to look at specialist lenders to achieve your objectives where the rates could be higher. This however is not due to the self-employment specifically but your individual circumstances and what mortgage you are trying to achieve.
There are self-employed applicants that can meet standard lending criteria with high-street banks securing the most cost effective mortgages available.
As a general rule you need a minimum of 1 year trading history to obtain a mortgage but not impossible. There are some circumstances e.g. CIS worker with 3 months history or Contractor or Locum Doctor that are self-employed with less than a years trading history but we are able to satisfy other lenders criteria due to the type of contract or self-employed you operate within.
If you’re seeking a mortgage with limited trading history, you might need to provide additional documentation, such as projected income, contracts, or letters from accountants, to demonstrate your ability to afford the repayments. It’s often beneficial to work with a mortgage broker who has experience with self-employed applicants, as they can connect you with lenders who are more likely to consider your application.
The majority of lenders require a minimum of 2 years trading history however there are a number of lenders able to provide a mortgage with 1 year trading history.
If it’s over 2 years the lender will often take an average or the latest year (whichever is lower) as the annual income.
When trying to find a mortgage lender with a 1 year trading history of self-employment, you often need to work with a specialist broker that can liaise with your accountant and build a strong business case, in some instances the lender requires a forecast of the upcoming year validated by the accountant.
As a general rule you need a minimum of 1 year trading history to obtain a mortgage but not impossible. There are some circumstances e.g. CIS worker with 3 months history or Contractor or Locum Doctor that are self-employed with less than a years trading history but we are able to satisfy other lenders criteria due to the type of contract or self-employed you operate within.
If you’re seeking a mortgage with limited trading history, you might need to provide additional documentation, such as projected income, contracts, or letters from accountants, to demonstrate your ability to afford the repayments. It’s often beneficial to work with a mortgage broker who has experience with self-employed applicants, as they can connect you with lenders who are more likely to consider your application.
Ltd Company Director Mortgages – A Case Study
Situation
We had an initial enquiry from a First Time Buyer looking to purchase a property. The clients had a 10% deposit but were struggling to find a lender due to the Newly Qualified Teacher (NQT) starting a new role on a 12-month fixed term contract, the role had yet to commence.
As the money was borrowed from the Ltd company the client had 9 months to repay the loan back to the Ltd company or be faced with HMRC tax penalty as a benefit in kind.
In terms of the clients income, they ran a successful business producing high net profits; however not all of these funds were allocated as dividends or salary but retained in the business as directors funds building a large pot of shareholder funds.
On both aspects this created some challenges. Why? For repayment of the Directors Loan this meant borrowing for ‘business purposes’ and many lenders are not able to assist for this purpose, also some lenders feel that this could impact the sustainability of Ltd company profits due to the funds being borrowed from it. In addition to this, as the client paid minimum salary and dividends, their personal income was low relative to the mortgage they needed to borrow.
Research
We required a lender that was able to work from the ‘net profits’ of the Ltd company, not the client’s personal salary and dividend withdrawals. In addition to requiring a lender comfortable with business borrowing as a purpose.
Following extensive research we found one lender able to offer the facility.
Recommendation
A small building society, offering a competitive rate albeit not as low as the high-street; however due to the clients unique circumstances we still were able to offer a facility to repay the Directors loan saving the applicant a considerable amount in potential tax liabilities. This lender required an Accountant Reference and Company Accounts to verify the income and sustainability of the company to approve the mortgage.
