What we cover in this guide
- Getting a mortgage as a company director
- Read our self-employed mortgage guide
- Try our self-employed mortgage calculator
- Company directors’ mortgages using the latest year’s accounts
- Finding the best mortgage lenders as a company director
- How much can company directors borrow for a mortgage?
- Mortgages for company directors with bad credit
- I have declared company losses, can I still get a mortgage?
- Company director mortgage advice
- Frequently asked questions
Getting a mortgage as a company director
As a director, it’s possible to find lenders who are willing to offer you a mortgage on reasonable terms. However, it is not always straightforward. Typically, these will be smaller, specialist lenders who can offer more flexibility when it comes to assessing your income.
However, like all lenders, they will each have their own criteria for calculating affordability. They will also assess your profits and assets differently when deciding how much you can borrow.
When applying for a mortgage as a company director, most lenders will expect your company to have been trading for a year beforehand. They will require you to provide at least one year’s worth of accounts, certified by a chartered accountant. However, they may often request up to three years accounts.
If your tax year does not match the usual HMRC April to April template, then a lender may consider the last 12 month trading period, rather than making you wait until the end of the current tax year.
Frequently asked questions...
- Will I have to put down a bigger deposit as a company director?
- What income do lenders use for company directors?
- How do I get a copy of my SA302?
The fact that you’re a company director does not in itself mean that you will need to provide a larger deposit. You should be able to access the same deals and loan-to-value (LTV) ratio offers as any other applicant.
Usually, this means you can borrow up to 95% of the property’s value in normal circumstances. Although, if you are seen as a risk to lenders, due to bad credit for example, you may be expected to have more.
It’s common for directors to minimise their income tax by drawing only a small salary from the company, retaining profits within the business, and taking dividends. Unfortunately, this low income on paper may mean that a lender will think you aren’t able to afford the mortgage you need.
Most lenders, including specialist lenders, will only consider the money you have drawn from the company as your income. So, they will assess your base salary, plus dividends drawn, when looking at an affordability calculation.
There are some lenders with a broader view and understanding of your business. These lenders have the flexibility to consider your share of the company’s net profits as your income, putting you in a far stronger position when borrowing.
An SA302 is the form you receive from HMRC after filing your year-end accounts. It will detail your income from all sources and your tax liability, breaking down how your income tax and National Insurance contributions have been calculated.
If you have an accountant, the SA302 will have been printed off directly as part of their process. However, if you submitted your tax return yourself, you’ll be able to sign into your account and access the records to print your SA302.
You should note that while many lenders accept printed SA302s, some may still ask for original documents from HMRC. If they do or you are unable to print them out for any reason or you submit your annual tax return by post rather than online, then you will need to contact HMRC to request copies.
You can do this by calling the self-assessment helpline on 0300 200 3310 and quoting your unique taxpayer reference (UTR) and National Insurance (N.I.) number.