Mortgages for Limited Company Directors

Lenders usually base the maximum total borrowing on a multiple of your verified income. Income multiples fall broadly in the range of about 3.5–5 times your income.

The exact figure will vary from one lender to the next and can also vary depending on circumstances. For example, past credit problems may mean a lender will apply a lower multiple, therefore reducing exposure to risk by limiting the lending amount.

Here’s an example of how different methods of income assessment can significantly affect the amount you could borrow:

Let’s say that your share of the company’s net profits is £250,000, but you only draw salary and dividends totalling £50,000.

Assuming an income multiplier of 5, a lender basing your income figure on salary plus dividends would lend a maximum of 5 x £50,000, i.e., £250,000.

A specialist lender, basing their income figure on the share of net profits, would lend a maximum of 5 x £250,000, i.e., £1.25 million.

If you want to get an accurate understanding of what you want to borrow, reach out today.

One of the things a lender will assess during your application is your credit history. This will help give them an idea of what you are like as a borrower and your ability to manage borrowed finances.

As discussed above, a bad credit history and score will lead to lenders perceiving you as a risky borrower. Therefore, lenders may impose things like higher deposit requirements or less favourable interest rates. It is even possible that they may reject your application all together.

So, before applying you should take steps to improve your more recent credit as this can be a great way to demonstrate that you have taken control of your finances. Lenders will recognise this, and they may be more willing to lend to you.

An essential part of any mortgage application is the ability to show a lender that you will be able to afford the mortgage you want. Doing this as a company director can be more difficult compared to someone in conventional employment, however, there are some steps you can take to do so.

• Show a consistent stream of income: this includes regular salary and dividend payments. Prepare things like payslips that could be used to prove this during your application.
• Demonstrate healthy financial habits: ensure that existing personal debts like loans and credit cards are kept to a minimum, will help demonstrate that you are in control of your finances and don’t have a high debt-to-income ratio.
• Clearly present your companies accounts: ensure your company’s financial records are accurate and up to date. This will prevent any delays in your application.

Company director mortgage requirements vary between lenders and navigating the market can be difficult at times. Therefore, speaking to the right broker can prevent your options being restricted. This means that you can access the best mortgages for company directors available on the market.

A specialist mortgage broker will be intimately familiar with the criteria, preferences and processes used by mortgage lenders. Once they have taken a close look at your circumstances, they will know exactly which lenders will be most suitable to approach, as well as which products you should consider.

They will also have access to a range of deals that are not available on the open market, often approaching lenders informally before an application. This helps them understand how flexible they can be in your particular circumstances.

At Just Mortgage Brokers, we have years of experience in helping limited company directors get mortgages. If you want to explore your options or if you have a query, get in touch today.