If you are a limited company director, then securing a mortgage can sometimes feel more complicated than it needs to be. But with the right preparation and guidance, the process can be easy and smooth.
In this guide, we will look at how the company director mortgage works, what income they use for company directors, and how company directors improve their chances of approval. With that, you can see details of fee free mortgage Broker.
Are Company Directors Mortgages Different?
A company director mortgage is a standard mortgage that takes into consideration how long your business has been running and its structure. The key is finding the right lender who understands how company directors are typically paid and who is willing to look at your full financial picture, not just the basic salary they draw.
Due to completions in income calculation, unlike an employed applicant, it makes the company director mortgages complex but not different.
What Income Type Lenders Use For Company Director Mortgages.
As lending criteria differ between lenders to lenders, the amount of accounting history and supporting documentation required may vary. Generally, lenders can consider the following income types for mortgage purposes.
Salary and dividend:
Most mortgage lenders will consider 2 years average salary and dividends as income for a company director.
Salary and net profit:
Some of the lenders consider salary and net profit as income for the company director. This can give them a boost in lending. Many company directors will take a basic salary and a higher dividend as on profit.
Salary and retained profit:
Very specialist lenders will consider salary and retained profit from previous years as income, which can increase the lending amount.
How lenders look at company director mortgage applications
Every lender will have their own set of criteria for a company director’s mortgage. But all of them will be looking at the following information at a minimum.
- Good credit profile for directors.
- Company accounts prepaid by the company accountants
- At least one year of trading history, if two years, that’s preferred
- Demonstrate that business is profitable and sustainable
- The company’s net profit and dividend income are taken.
- You can check Mortgage Broker London and other locations in the UK.
Top Tips For Mortgage Approval for a Company Director
- Work with a Specialist Broker:
Mortgage brokers with experience in self-employed and company director mortgages can increase your chances of success and save a lot of time.
- Plan:
Plan your mortgage application at least 6 months in advance. This will give you enough time to prepare yourself for a mortgage.
- Avoid sudden changes:
Lenders look for business stability. Avoid sudden change, like a change of accountants, making large transactions or even business structure. This can help with the mortgage application overall.
Why work with a mortgage expert for a company director’s mortgage?
Applying for a mortgage for company directors can be complex, not just ticking boxes. Lenders need to know your business and your financial story.
With many years of experience working with self-employed businesses, they understand how to present the case to the most suitable lender, showing salary and dividend or retained profit. As a whole market mortgage broker, they also have access to specialist lenders offering flexible underwriting.
Summary
Securing a Limited Company Director mortgage requires understanding your unique financial situation and finding the right lender to fit your needs. By starting to work in advance and planning with the help of a specialist mortgage broker, you can navigate the process successfully. Contact a specialist mortgage broker to secure your mortgage and take the next step towards property purchase or remortgage.
