When applying for a mortgage as a company director, it would be vital to get prepared early. Applying for a mortgage as a self-employed folk may take more time, especially if you are busy running a household and a company.
Working with a reliable mortgage broker or agent and your financial accountant means you will have the upper hand before you even start researching.
What is more, a reliable broker will enable you to get the right mortgage UK deal and, at the same time, liaise with mortgage lenders and complete the necessary paperwork.
Is it Possible to Get a Mortgage as Company Director?
A good mortgage broker can help you secure mortgages and respond to questions regarding how to get a perfect lender, depending on your credit score and retained profits.
Most individuals avoid applying for mortgages as a company director since they believe they won’t be approved. But it is possible to get a mortgage with a broker by your side.
How Hard Is It?
There are several reasons some mortgage brokers can be hesitant to help you acquire the loan as a company director. Many of these reasons come down to cautiousness regardless of all your future earnings dependability.
Generally, company directors are recommended to take their income as dividends instead of PAYE (Pay As You Earn) payments. This means your earnings depend on your company’s performance, which may fluctuate.
Such factors can make your income complex compared to individuals who are employed. Most lenders also don’t like complex incomes. That is because they take more time to process and understand.
Information You Need to Provide
As a company director, know that most lenders may only use your salary derived from your business, called remuneration, combined with all the dividends you take.
It is very common for many lenders to demand that you provide details. But as you already know, this doesn’t always show the entire story of the ways business works.
The most common scenarios of entrepreneurs who are struggling to get mortgage include company directors who:
- Have been running their companies for less than three years
- Choose to retain profits in the business
- Employ a family member in the business
- Face different levels of the annual turnover
Deposit You Will Need
The minimal amount of deposit you may put towards your mortgage is around 5%. However, you will have a high-loan-to-value ratio with a small deposit, meaning interest rates for a mortgage will be higher.
Putting a bigger deposit of around 20% or even more can get you competitive rates. If you have credit, you may require at least a 10% deposit, based on the severity of your debts.
The Amount You Can Borrow
There is no artificial limit placed on company directors in terms of getting a mortgage. It all boils down to your affordability.
So this means you may borrow as much money as possible, just everyone else. Plus, mortgages don’t use income formulas anymore.
Getting a mortgage as a company director is mostly simple. But it might be complex when you are unsure of what kind of income you may include as proof of earnings and which mortgage lenders would be suitable. This is why it is important to enlist the help of a good broker to guide you through.