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Limited Company Director Mortgage Made Easy
Can I get a Mortgage if I am a Limited Company Director?
Yes, you can. Contrary to what you may have heard, mortgages for Limited Company Directors can be more straightforward than you think.
Provided you have a good credit rating, your business has been running for more than 12 months and is profitable, you shouldn’t have any problems. To boost your chances of getting that all-important mortgage offer now’s the time to talk to an experienced Mortgage Broker.
They have access to specialist lenders who understand the way small businesses work and how Limited Company Directors and Sole Traders pay themselves. Unlike the majority of lenders and their appointed representatives, these specialist providers are not as risk-averse as your run of the mill high street lenders.
You may find their interest rates are more competitive too.
How do I document my trading history?
When you are applying for a mortgage you will need to document your trading history in a coherent way. This is so the lender’s underwriter will be able to calculate how much to lend you.
It’s important to give your accountant the heads up so they can get things ready for you. You can also ask your accountant to draft a reference that summarises your business as a going concern.
You will need to have the following in place.
- Finalised limited company accounts
- Operating profit (pre and post-tax)
- Bank statements – showing cash flowing in and out of your business
- Reference from your accountant
- Your Limited Company reference number and registered office address
- Business Credit reference
If you earn other Self-Employed income outside your Limited Company, you will need to submit your latest Self-Assessment tax return, tax calculations and tax year overview from HMRC.
How do I prove my income?
To prove your income, you’ll need evidence of your salary and dividends. If your accountant runs your payroll and issues dividend vouchers, they will have electronic copies of these.
You can include your director’s PAYE payslips as evidence of your basic salary.
Discuss your dividend drawdowns with your accountant. Increasing these while you are applying for a mortgage means the lender will see you have sufficient income to cover the mortgage repayments.
If you retain profit in your business rather than pay it out to yourself as dividends, it may be discounted by lenders as income. Lenders will differ in the way they view retained income, however, you will be able to explain why you are retaining profit in your business.
One other thing to bear in mind is that if staff or other directors in your company have mortgages with the same lender, they will need to be made aware.
What if I have fluctuating income?
Every business is different and a one-size-fits-all approach to mortgages for Limited Company Directors is not realistic. If your business is seasonal, has off-peak periods and times when your turnover is higher than others – don’t worry.
Make sure you tell your Mortgage Broker at your introductory meeting so they can factor this in. They will inform the lender who will work out an average income across your 12 month trading period.
What deposit will I need?
A larger deposit will always help your mortgage application and will enable you to take advantage of the most favourable mortgage rates. A minimum of 20% is a good goal to aim for.
If you can’t stretch to that much, provided your other credentials are excellent, the lender is likely to lower their deposit expectation.
How can Lime Tree Financial Services help?
We take pride in helping our Self-Employed customers secure bespoke mortgages that suit their individual needs. That means we understand how you are paid and the documents you’ll need to satisfy one of our specialist mortgage lenders.
We will help you save time by searching the market for you. We will compile, complete and submit your application for you and deal directly with the lender to make sure your mortgage application runs smoothly.
Once your application has been approved, we will run through all the terms and conditions with you. We’ll also talk you through what you’ll need to protect yourself, your family and your home.