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Below are a few common questions we get asked by company directors that may be useful.
It’s important to note that there isn’t a blanket requirement for limited company directors to provide a larger deposit. Your deposit amount will depend on various factors. In typical situations, you may have access to offers allowing you to borrow up to 95% of the property’s value, similar to other borrowers. However, in cases where you have adverse credit ratings or wish to secure more favorable mortgage rates, a larger deposit may be necessary.
Lenders experienced in extending mortgages to company directors recognise that a director’s base salary alone doesn’t provide the full financial picture of the company’s profitability. It’s essential for business owners to seek out specialised lenders who take the following factors into account when evaluating a mortgage application:
Our dedicated advisors will carefully assess your unique circumstances, helping you secure the maximum borrowing amount at the most favorable interest rate. If necessary, we can also communicate directly with your accountant to ensure the proper documentation is obtained.
Absolutely! There are indeed lenders, including some well-known high street institutions, that provide mortgages to limited company directors. To receive guidance without leaving your home, complete our quick form at the top of this page and we’ll connect you with the advice you need.
As a Limited Company Director, you have access to the same mortgage options as other applicants, whether they are employed or self-employed. The key distinction in the application process for a company director lies in how your income is evaluated. It’s crucial that your mortgage broker assesses your application accurately and selects the right lender based on your specific circumstances.
Certainly, being a limited company director alone will not hinder your eligibility for a mortgage, as long as you can provide at least one year of limited company accounts or personal tax returns. Lenders will evaluate both your personal and your company’s income during the assessment process.
It wouldn’t be accurate to claim that securing a mortgage as a company director is as straightforward as it is for individuals in standard employed positions. Lenders approach your application differently and often request additional information about your situation. Many individuals discover that engaging a specialized mortgage broker greatly simplifies the process, eliminating the guesswork of applying to lenders who may not be accommodating regarding your income or may lack suitable policies for your specific circumstances.
While certain lenders limit self-employed lending to 4.5 times your annual income, there are options that can extend it to 5.5 times, especially if you have a substantial income. The amount you can borrow depends on various factors, including your company’s pre- or post-tax profits, your dividends, and your director’s PAYE salary, also known as directors’ remuneration. Depending on your specific circumstances, these figures can be derived from a single year’s documentation, an average of two years, or your most recent year’s financial information.
No, your employment status is not an element that is recorded on your credit report. However, it can potentially be a consideration for lenders when they evaluate your overall financial situation.
Certainly, dividends, in addition to your director’s salary (remuneration), are counted as income. This typically includes dividends from your personal tax calculations (SA302) for the most recent year or the average of the last two years. However, for company directors, this might not always be the most accurate way to evaluate income, as accountants sometimes reduce dividend payouts to minimize personal tax liabilities. Fortunately, there are alternative methods available for verifying your income.
As a company director, there are two types of documentation you can utilise to establish your income:
Typically, these documents should not be more than 18 months old, and you will need to provide one or two years’ worth of either of these documents. Additionally, lenders may also consider verifying your income by examining your most recent three months of business bank statements.
We’re often asked to comment on the latest hot topics from across the property industry,
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