Limited Company Directors Mortgage

Our specialist advisors have years of experience arranging mortgages for limited company directors who come up against some common problems in the process:

  • A high net profit and not taking it all as dividends (retained profit)
  • Had a significant increase in profit on their latest years figures
  • Dealt with a lender or broker who simply doesn’t understand their income

If you have encountered any of these issues, enquire now to be put in contact with one of our specialist team

Looking to buy a rental property through a limited company? – Take a look at our buy-to-let mortgage page for more information.

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With so many people now being self-employed some lenders have changed the ways in which they will assess their income.  This results in many customers being given incorrect information when applying directly to banks, building societies and often some of the less skilled mortgage brokers working in the market.

What information do I need to provide to get a mortgage as a Limited Company Director?

As a director of a Limited company, the majority of lenders will only use your salary derived from the business (referred to as remuneration), combined with the dividends you take.  It is common for mortgage lenders to demand you provide information ranging back over the past 3 years!  As you are already aware, this does not always reflect “the whole story” of how a business works.  Common scenarios of business owners who struggle to obtain mortgage borrowing include directors who:

  • choose to retain trading profits within the business
  • have been trading for less than three years
  • face differing levels of annual turnover, causing problems when “averaging calculations” reduce the amount of capital available to borrow
  • employ family members within their business (often for tax planning reasons), which is not recognised by some mortgage lenders and therefore reduces the amount of lending available

As a mortgage is secured against your home/property it may be repossessed if you do not keep up the repayments.

Frequently Asked Questions

It’s not necessarily the case that you will have to put down a larger deposit as a limited company director. Depending on your circumstances, you will have access to the same offers as any other borrower – so that’s up to 95% of the value of the property available in straightforward scenarios, with a larger deposit potentially required if you’ve an adverse credit ratings or to gain access to more attractively priced mortgages.

Lenders with experience in providing mortgages to company directors understand that a company director’s base salary provides only part of the picture of how profitable the company is. It is crucial the business owners find specialist lenders who are willing to consider the following when assessing a mortgage application:

  • Operating profit (before or after taxation)
  • Directors salary
  • Latest years figures
  • 1 Years trading
  • Other applicants employed by the company
  • Reference from a qualified accountant

Our specialist advisors will assess your specific circumstances to help you achieve the maximum you can borrow, at the best interest rate available and will also speak directly to your accountant if required to obtain the correct paperwork.

If you have a limited company to accept income from your role as a contractor, please see our contractor mortgage page.

Yes, rest assured there absolutely are lenders out there who offer mortgages to limited company directors, including a few of the big high street names. Use our Find A Mortgage tool and we can get you advice without having to leave your home.

As a Limited Company Director, the same mortgages are available to you as any other employed or self-employed applicants. The main difference between an application for a company director, and any other applicant is the way your income is treated; it is important that your application is assessed correctly by your mortgage broker and that they apply to the correct lender for your circumstances.

 Yes, being a limited company director will not, in itself, affect your chances of being accepted, provided you have at least one year of limited company accounts or personal tax returns.  You and your company’s income will be assessed by the lenders.

It would be wrong to say that it isn’t more difficult to obtain a mortgage as a company director than it would be if you have a standard employed role. Lenders will treat you differently and require more information regarding your situation. Many people find using a specialist mortgage broker makes the process a lot easier and eliminates the trial and error process of applying to a lender who may not be flexible with regards to your income, or may simply not have a policy suitable for your circumstances.

Although some lenders will cap self-employed lending to 4.5 times your annual income, there are lenders who will go up to 5.5 times if you are a high earner. How much you can borrow will be determined by your company’s profit before or after taxation or your dividends and your directors PAYE salary (referred to as directors remuneration). Depending on your situation this can be taken from only 1 years documentation, an average of 2 years or your latest years figures.

No, your employment type is not something that appears on your credit file, but it could be a factor when lenders are making their own assessment of your overall circumstances.

Yes, alongside your directors salary (remuneration), dividends from 1 years personal tax calculations (SA302)  or the average of the last 2 years. As a company director this may not be the best way to assess your income as accountants can often minimise the amount of dividends taken to lower your personal tax liability. But there are other ways of proving your income.

As a company director there are 2 types of documentation that you can use to demonstrate your income.

  1. Your limited company accounts which will show your operating profit before and after taxation
  2. Your directors remuneration and your personal tax calculations which will show your income from employment and your dividends.

Both of these documents are generally required to be no more than 18 months old and you will need 1 or 2 years of either of these documents. Lenders may also look to verify your income by using your last 3 months business bank statements.