Mortgages for limited company directors

Getting a mortgage as a limited company director isn’t difficult. Getting one that reflects your true affordability, however, is a different matter.

Lenders’ income assessment criteria for company director mortgages vary immensely. Those criteria can be complex and even unnecessary. So despite your comfortable income, a lender may reject your application. Not through malice, but because they don’t understand your payment structure.

To save you from running that gauntlet, you need a mortgage lender who knows:

• How retained profits form part of your income
• That payslips and tax returns don’t comprise your total affordability
• That you’re not a risk just because you only have one year’s accounts

To avoid this minefield, both the self-employed and company directors alike turn to specialist brokers. A broker with relevant experience and existing relationships with underwriters can often turn ‘decline’ into ‘accept’.

What are the mortgage application criteria for company directors?

Finding a lender with a common-sense approach to underwriting income assessments is key. More precisely, an underwriter willing to look beyond the traditional tax assessment. On the High Street, that’s often the biggest challenge. You’ll rarely find a specialist underwriter outside of an institute’s head office, let alone ‘in-branch’.

At branch or call centre level, most advisors ask directors for at least 2-3 years’ worth of accounts as evidence of income. And then, they only assess affordability using income physically drawn from your company. That means they only use salary drawn plus dividends in their equation, ignoring profits left in the business.

By not taking into account retained profits, they miss out a crucial section of your income. This omission can undermine your borrowing capacity if you run a ‘tax efficient’ company, as most directors do.

But some lenders, in particular those we work with, accept only one year’s trading history and accounts. Often, it’s this most recent year that most reflects your current affordability. If you’ve gone through a period of growth, including the prior two or three years’ history could dilute your current trajectory.

Our lenders’ underwriters also consider your share of the company’s net profits as income. This alone can make a considerable difference in their affordability calculation. The more a lender classes as relevant income, the more you can borrow as a low risk applicant.

Why your application stands a better chance in our hands

Before we send your application anywhere, we get to know you. By building up a picture of where you are and where you want to be, we can align you with a lender most sympathetic to your situation.

Thousands of borrowers arrive at our door having been let down elsewhere. Our expertise has placed their application in the right hands, with favourable outcomes. That’s all because we deal daily with lenders who:

• Assess affordability on net profits and accommodate percentage of ownership
• Understand the nature of tax-efficient business planning for limited company directors
• Offer bespoke underwriting for company directors with multiple sources of income or complicated circumstances
• Give us direct access to senior underwriters who assess each individual case on merit
• Accept only one year’s accounts or the latest year’s figures to evidence income

To see how we can help with your director’s mortgage, call 0208 421 7998 or enquire now.