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Company Director Mortgages
Securing a mortgage as a limited company director can appear more difficult compared to other types of mortgage due to the extra complexity in proving your income. By speaking to our expert team of company director mortgage advisors, we can help to point you in the right direction.
To help company directors there are mortgages and lenders specifically specialising in this area of employment. How you declare and provide proof of your income will differ from those in regular full-time employment, therefore it is important to choose a lender who understands the complexities of your employment and financial situation.
How are dividends used in company director mortgage calculations?
The income used to calculate affordability for Ltd company directors will be a combination of salary drawn plus dividends. For most company directors, your accountant might have suggested you take a salary up to the tax-free threshold, and then draw dividends for any other income.
Whilst many directors choose to leave cash in the business to avoid paying further income tax and to provide growth funds in the business, most lenders only consider ‘income’ as the actual financial drawings from the business. Some specialist lenders will consider the share of net profits in addition to the salary plus dividends, which can help to secure a significantly larger maximum mortgage value through the use of retained net profit.
Frequently Asked Questions
- What happens if I have recently moved from being a sole trader to being an Ltd?
In most instances, the lenders will consider the Ltd business as a fresh business and as such, require the standard one to three years worth of trading accounts as proof of your income and affordability. However, there are a select few specialist lenders who will take into consideration your previous business ventures as proof of income.
- How will declared losses affect affordability?
Using high street lenders, a declared loss in the last three years will make it difficult to secure a mortgage as this can indicate a lack of income reliability and therefore, pose a greater risk to the lender. This is especially true if the declared loss occurred in the most recent trading year.
If the loss was over two years ago, and the business has undergone a recovery or growth since then, there are several lenders who will likely consider your application.
One major factor that will impact your affordability after a declared loss is whether your salary is deducted before profits. In certain circumstances, your application may still be approved.
Start your limited company director mortgage process with us
As we are not tied to any specific lender, we can make sure that we help you to select the right mortgage for you and your property. Call us for an initial, free of charge consultation. There is no obligation to use our services and you can meet in one of our offices in Horsham and Southwater, or arrange a phone based appointment.
YOUR HOME MAY BE REPOSSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER DEBT SECURED ON IT
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