Getting a mortgage as a Company Director
- The main criterion with Company Director Mortgages will be if you hold equity/shares in the company
- If you own less than 25% of the equity in the company, you’ll most likely be treated as a normal employee
- If you own 25% or more of the shares in the business, most mortgage lenders will treat you as being self-employed when you apply for a Limited Company Director’s Mortgage
- With considerable influence on the company, specialist lenders for Company Directors often deem the company performance as equally valid as your income, as this often is the key indicator to the sustainability of your income. However, when presented correctly, the majority of high street lenders will gladly offer you the loan you need
Mortgages for Limited Company Directors’ approval
- Most lenders will want to look at the company accounts and/or want a reference from your accountant/Finance Director
- Company performance is a significant factor in Mortgages for Limited Company Directors including Covid support, especially if the company has made a loss in the last 2 years
- You may prefer to talk to Private Banks or specialist lenders for Company Directors if this is the case as they can understand your situation better
- The company sector is also a major factor for a Limited Company Director’s Mortgage as the lender needs to be convinced that the business is viable in the future, depending on the business model.
Company Director Mortgages advice
- Using an experienced mortgage broker is important as we can identify and extract your relevant information and present your Limited Company Director’s Mortgage case effectively
- We approach and provide a logical explanation for your complex situation to the right lender
- Lenders can have some quite complex rules, however, with correct presentation, documentation and explanation, many High Street lenders should be amenable, if not, there are smaller, more specialist firms that can be approached.
How much can I borrow with a Home Movers Mortgage?
- The short answer is, about four and a half times your income.
- But some lenders may offer as much as five and a half times your income.
Your Borrowing = 4.5 to 5.5 x your income
What types of income are acceptable for a Limited Company Director’s Mortgage?
- Company Directors tend to have a larger, more complex income
- If you earn over £300k per annum you are deemed a High Net Worth individual by the FCA and affordability rules don’t apply in the same way
- Mortgage lenders can be much more flexible in how they grant you a Company Director Mortgages mortgage.
- Specialist lenders for Company Directors may be open to accepting a lower deposit than would typically be the case or stretching the loan amount further.
- If you do own a large stake in a company and are considering exiting at some stage via sale/buyout/floatation Private Banks will be keen to work with you, as you may realise a large ‘liquidity event’ in the future (e.g., sale of the business) which you may then need assistance with reinvesting.
Types of income
Company Director Mortgages lenders will look at:
- Your basic salary
- Any bonus/commission
- Any dividends received
- Drawings/profit share if you work in a Limited Liability Partnership
- Most of this information can be captured in your tax return via the ‘SA302’ which is the confirmation of your tax statement from HMRC.
- If that is not available, company accounts or an accountant’s reference many be easier to use.
- You need to balance:
- How much of a loan do you need?
- What type of income verification is available?
- What timeframes do you need to move in (as some lenders are painfully slow)?
- How does the lender treat the income that has been presented?
Your Company Director Mortgages structure
One of the first things to consider is your repayment vehicle.
Do you want to opt for?
- a repayment loan?
- an interest only loan?
- part & part which is a combination of the two?
What is a Repayment mortgage?
You make monthly payments and at the end of the term the loan is repaid.
With a repayment mortgage the monthly payments are higher but with less risk.
What is an Interest Only mortgage?
You simply pay the interest on the mortgage loan and look to pay off the loan later with say, the sale of property, investments, or bonuses.
With an interest-only mortgage the monthly repayments are lower but is assessed as higher risk.
Your mortgage product
You will also need to consider which type of mortgage product is best for you as this determines your monthly payments.
- Fixed Rate Mortgage. Your repayments are set for 2,5, 10 years.
- Variable mortgage. This is sometimes cheaper, but the rate can go up or down depending on the market and is often penalty free if you want to remortgage.
Rather than asking how much it will cost, consider how much can you afford.
Your mortgage broker will then structure your mortgage appropriately, based on your risk profile.
What rates can I get?
- The actual mortgage rates you will be offered will be dependent on your personal circumstance and deposit level. Your mortgage broker will advise you.
- Therefore, think about how much you want to spend each month on your mortgage repayments.
- Only brokers have access to a range of lenders in the market, and we have access to exclusive mortgage deals.
For Company Director Mortgages mortgage advice
- Rose Capital Partners takes the time to understand your mortgage goals to secure the optimal mortgage deals for Company Director Mortgages.
- Our Limited Company Director’s Mortgage advice is second to none. We will advise you on mortgage interest rates appropriate for you.
- Our aim is to maximise your borrowing potential, minimise your monthly payments and work with you throughout the lifecycle of the loan to manage down the mortgage.
- You are treated as a valued client, not a transaction, and dealt with by an experienced, empathetic person, not an algorithm.
- We have access to competitive deals and with no affiliation to third parties. We will always act in the best interests of you, our clients to give you the best Mortgages for Limited Company Directors’ advice possible to achieve the right mortgage for your life’s goals.