Can I get a mortgage if I am a Limited Company Director?

There are plenty of mortgage deals out there and as a Limited Company Director, you will be able to access all of the same mortgage deals as everyone else, however most lenders will only use your PAYE Income and Dividends you have drawn from the business as your total income.

There are some lenders that will consider retained profits if you need to borrow more than your PAYE Income and Dividends will allow, you’ll just need to be prepared to prove your income and show your chosen lender all of your company accounts. 

A mortgage broker can help and offer tailored advice for your specific circumstances.

How do I document my trading history?

Lenders can ask for information as far back as three years, so you need to make sure that you are prepared and have these documents to hand alongside your mortgage application, you’ll need to provide your salary and any dividends that you take.

These can be proved with your accounts and your tax overviews known as an SA302s including tax year overviews, this is so your lender can easily see that you can afford the mortgage you are applying for. It is important to ensure you make the repayments on your mortgage otherwise your home may be repossessed.

What about PAYE income?

PAYE income is also sometimes called your director remuneration, a lot of company directors take a small amount of income as PAYE income and their remaining income as dividend income as it can be tax efficient.

Dividends

Most lenders will include Dividends as income when calculating the mortgage you can afford, but lenders will often want to check your company profits support the level of dividend you are drawing.

Retained Profit

If you have capital retained within your business, then you might be wondering if these can be factored into your overall mortgage amount. There are lenders who will consider allowing you to factor in retained profit, but you will need to find them as they are usually specialist.

What if I have a fluctuating income?

Sometimes your income can fluctuate for a number of reasons, but there will still be lenders out there willing to accept you onto a mortgage and a mortgage broker can help you find a lender best suited to your needs.

If you have a fluctuating income, lenders will typically work out an estimated annual income for you, based on your current and previous tax year incomes. A lender will even consider the projected years’ income if the business is likely to see ongoing growth.

It can be worth approaching a lender with a bigger deposit if you think you could have some issues with your income and it not being regular. If you can provide a bigger deposit, it can make lenders more willing to listen to your circumstances and see how serious you are about investing in property.

How much can I borrow?

The amount that you will be able to borrow in terms of your mortgage will heavily depend upon your income, levels of personal credit commitments and your previous credit history. 

It is important to ensure that you have a good credit rating as it will make a difference to mortgage and interest rates.

Typically, you will be able to access up to 4-5 times your annual income, to have the best chance of approval, always make sure your finances are in order before approaching a lender.

What deposit will I need?

You’ll need to provide at least a 10% of the property’s purchase price as a deposit towards a mortgage. There are schemes out there such as Help to Buy if you happen to be a first time buyer which can be accessed to provide only a 5% deposit.

As mentioned before, it is best to approach a lender with as large a deposit as you possibly can. Lenders will be more willing to accept you onto a mortgage or offer you more exclusive mortgage rates with a larger deposit.

How can a Mortgage Broker from CD Financial help me?

An expert mortgage broker from CD Financial can help to navigate you through applying for a mortgage. There are a lot of different mortgage products out there and it can be daunting to delve into the mortgage market.

Here at CD Financial, through Openwork Limited, we are authorised and regulated by the Financial Conduct Authority meaning we are qualified to give the mortgage advice you seek. We will listen to your circumstances and then tailor advice to you, hand-picking lenders who are the right fit for you.

Your home may be repossessed if you do not keep up repayments on your mortgage.