Mortgages for company directors

Here’s everything you need to know about getting a mortgage if you're a company director.

Can a company director get a mortgage?

It is definitely possible to get a mortgage as a company director, but the process can be complicated. Every company is different, and each lender will have different ways of assessing you and your income.

This means you may get very different offers from different lenders, and some may be unable to offer you a mortgage at all. 

The main reason it can be harder is that you can be seen as a higher-risk applicant, and it is often more difficult to assess your income accurately.

Why can it be harder to get a mortgage as a company director?

The main reasons that it can be more complicated to get a mortgage as a company director include:

As a director, you may pay yourself through a combination of salary and dividends, which will vary from year to year. Lenders prefer to see a stable and predictable income, making it challenging to assess your earnings accurately.

Lenders often view self-employed applicants like company directors as a higher risk because of the perceived instability of their job.

If you are a limited company director, lenders might look at the business’s financial health alongside yours. They will want to look at the company accounts, cash flow and debts, making the application process much longer and more complicated.

Many lenders require a larger deposit from self-employed applicants to offset the added risk. This can be as high as 25%, making it harder to save up the required amount.

How do I prove my income as a director?

If you’re looking for a limited company director mortgage, most lenders will want to see evidence of the salary you derive from the business and the dividends you take. To prove this, you may need to provide:

  • SA302 and tax returns

  • Company accounts

  • Dividend vouchers

  • Payslips and contracts

  • Bank statements

Depending on your role and how you receive your income, you may only need to supply some of these documents. Most lenders will only consider the income you take from the business and won’t consider the rest of the profit your company makes.

If you’ve limited the amount you take from the business to maximise tax efficiency, you may find it harder to borrow enough. However, some specialist lenders will consider your share of the company profits, which will help you boost what you could borrow.

How long do I need to have traded for to get a mortgage?

Trading history is one of the most important factors lenders look at when assessing a mortgage for a company director.

The longer you have been trading, the better your chance of getting a good mortgage deal. Lenders base their lending decisions on risk, so the more evidence you have of trading, the less risky you will be considered. 

If you have one year or less of trading, you will find it very difficult to find a mortgage. However, If you have written contracts that confirm future income, this could help you get a mortgage even with less than one year of trading. 

Most lenders want to see at least three years of accounts to consider your application. If you’ve been trading for less than three years, speak to a mortgage broker who could help you find a lender willing to consider your application.

How much can I borrow as a company director?

How much you’ll be able to borrow will depend on things like:

Lenders will look at your salary and the dividends you take and multiply these by between 4 and 5 to work out the maximum amount you can borrow.

Lenders will also look at your outgoings as well as your incomings to work out how much you can afford to repay each month.

You will need a larger-than-average deposit as a self-employed company director. For example, most lenders want at least a 20% deposit, which means you could borrow up to 80% of the property price.

All lenders check your credit report as part of your application and use your score to help them work out how much they can lend. A higher score can mean larger loan amounts and better rates.

How to get a mortgage for a company director

  1. Understand what you need: You need to know exactly how much you need to borrow before you can start looking for a deal. A mortgage calculator can help you understand what you could borrow based on your income.

  2. Prepare your documents: As a company director, you’ll need to provide several documents to show evidence of your income and company profits. If you have an accountant, speak to them about getting your company accounts and income statements together.

  3. Check your credit report: Lenders use your credit score to help them work out if they can offer you a mortgage and how much. It’s vital to check your credit report to make sure all the information is up to date, as any inaccuracies could damage your score.

  4. Talk to a broker: It’s a good idea to speak to a mortgage broker or financial advisor who has experience working with company directors. They can provide tailored advice, access the whole market, and help navigate the complexities of the mortgage application process.

Our expert says...

“Getting a mortgage as a company director comes with a few more hurdles you’ll need to overcome, but there are great deals out there.

Speaking to an expert broker is a good way to help you understand your options. They can help you work out your affordability and search the whole market to find mortgage deals perfect for you.”

Jon Bone \ CeMAP-qualified

Mortgages for company directors FAQs

Getting a mortgage if your company has been liquidated is still possible, but it can be more difficult. If you’re personally liable for some of the company’s debt, this could affect your credit score and affordability, which will put off a lot of lenders.

Even if your credit score isn’t affected, lenders will still want to understand more about the liquidation, including how it came about and what the causes were.

It is possible to take out a mortgage on a property through your limited company rather than your own name. However, this option is usually only available on buy-to-let properties.

Mortgages for limited companies are also usually only available for Special Purpose Vehicles (SPVs). This means your company needs to be solely for buying, selling and letting properties.

It is possible to remortgage to raise money for your business. When you remortgage, you can access more funds, and how you use them is up to you.

Before you remortgage to raise capital for your company, consider the risks and benefits carefully. It's important you weigh the impact on your personal finances, make sure you can afford the increased mortgage repayments, and have a clear plan for how you will use the funds in your business.

Getting advice from a mortgage broker or financial advisor who can help advise you is a good idea. They can highlight the risks and help you find the best deal if you choose to go ahead.

Most lenders want to see several years' worth of accounts before they are willing to offer you a mortgage. If you have been a company director for less than a year, it’ll be harder to find a mortgage, but not impossible.

If you have been a director for three or more years, you will have enough accounts to satisfy most lenders.

As with any mortgage applicant, getting accepted will be more difficult if you have a poor credit history. How difficult it is will depend on how bad your credit problems are; for example, if you have a County Court Judgment (CCJ), you will find it very difficult to find a lender willing to offer you a mortgage.

However, if your credit score is only slightly below average, you should still be able to get a mortgage. You may find you’re unable to access the best rates, as these are reserved for those with strong credit scores.

What people are saying about Better.co.uk...

 
 
 
 

Important info & marketing claims

You may have to pay an early repayment charge to your existing lender if you remortgage. Your savings will depend on personal circumstances.

Your home may be repossessed if you do not keep up repayments on your mortgage.

*The savings figure of £506 is based on Better.co.uk remortgage customers in December 2023. Read more on our marketing claims page.

We can't always guarantee we will be able to help you with your mortgage application depending on your credit history and circumstances.

Average mortgage decision and approval times are based on Better.co.uk's historic data for lenders we submit applications to.

Tracker rates are identified after comparing over 12,000 mortgage products from over 100 mortgage lenders.

As of January 2023, Better.co.uk has access to over 100 lenders. This number is subject to change.

For buy-to-let landlords, there's no guarantee that it will be possible to arrange continuous letting of a property, nor that rental income will be sufficient to meet the cost of the mortgage.