Getting on the property ladder as a company director
As a company director, there are a handful of ways you may receive your income, and this can sometimes be confusing when it comes to applying for a mortgage. At Mortgage Synergy, this is an area of expertise for our team — we have plenty of experience arranging mortgages for company directors.
Your mortgage options as a company director
As a company director, lenders will place a significant emphasis on the income assessment. Most will look at your salary, your net profits, your dividends, and or a mix of these. While a company director mortgage works the same as a standard one; most lenders will take your business structure into account too.
As a general rule of thumb, if you own more than a 25% share of a limited company, lenders view you as self-employed. And if you own less than 25% share, your normal employed income will apply during the mortgage process.
If you’re a shareholder, there are several options available:
- Option 1 – Salary and dividends
Many lenders assess your salary and dividends, which are taken from the limited company. They will use the figures listed on your personal tax calculation or SA302 from HMRC — most ask for two years’ worth of these.
- Option 2 – Small salary sums
Some limited company directors/shareholders take a small salary without drawing a significant sum in dividends to keep tax liability low. If this is how you operate, we can use your share of net profits in the limited company (after corporation tax), alongside salary, to assess mortgage affordability.
If you don’t withdraw significant sums from your company (and it makes a decent profit), we can use that sum as your income in your application. Most lenders request an average of two years of income, but there are lenders who use the latest year of accounts if it’s higher.
It’s never to early to discuss your mortgage
Tell us about your mortgage requirements and one of our specialist advisors will be in touch within 24 hours.
Eligibility criteria for company directors
When applying for a company director’s mortgage, you need at least one set of accounts. This depends on how you operate. For example, if you’re a contractor, it’s possible to set up a mortgage from day one of work with our specialist mortgage brokers.
Two years’ worth of accounts opens up most of the lending market.
What documentation do I need for a company director mortgage?
Like any mortgage, you will require the standard documentation:
- Proof of ID and address
- Proof of income, e.g. payslips (if applicable) or bank statements
- Evidence of your deposit.
Proof of income as a company director may look a little different. It may include your limited company accounts or your SA302 — evidence of your earnings from the past four years if you’ve submitted your self assessment tax returns.
Some lenders may ask for your business bank statements to clarify if your monthly turnover matches your annual turnover, and if you’re still trading.
Our brokers will assess your situation and ensure you have the necessary documentation ready for your application.
Finding your tax calculations for proof of income
Here’s how to find your tax calculations from previous SA302s:
- Login to your online HMRC account
- Select ‘Self Assessment’
- Follow the link ‘Get SA302 Tax Calculation for tax year 20xx to 20xx’
- Click ‘View your calculation’ and scroll to the bottom of the page
- Select ‘View and print your calculation’
- Then select ‘Save as PDF’
Here’s how to get your tax year overviews:
- Log into your HMRC account and select ‘Self Assessment’
- Follow the link ‘View Self Assessment return for tax year 20xx to 20xx’
- Select the appropriate tax year from the drop down box and click ‘Go’
- Scroll down and click ‘Print your tax year overview’ then select ‘Save as PDF’.
Our team understands how company directors operate, so your mortgage application is in the best hands. We can provide recommendations based on your individual circumstances and support you through the application process. Get in touch with us to get the ball rolling.
Your home may be repossessed if you do not keep up repayments on your mortgage.
