Yes, a company director can get a mortgage. Although the process may seem more complex, many company directors successfully secure mortgages every year.
That’s because company directors are often assessed differently from employed applicants. Their income may come from salary, dividends or company profits rather than a fixed monthly wage. The good news is that many lenders understand these income structures. Knowing what lenders look for can help you prepare a stronger mortgage application and improve your borrowing potential.
Here at Jones & Young, our guide explains how company directors are assessed, what documents you’ll need and the steps you can take to improve your chances of getting a mortgage.
Can a Company Director Get a Mortgage?
Yes. Company directors can get a mortgage in much the same way as other applicants, but the way their income is assessed is often different. This is because many limited company directors receive income through a combination of salary, dividends and company profits rather than a regular monthly wage.
Whether you’re buying your first home, moving house or remortgaging, there are mortgages for company directors available. While some mortgage lenders focus on traditional income, many specialist lenders understand the way company directors structure their finances and offer mortgage products designed for self employed applicants.
Why Company Directors Are Assessed Differently?
Unlike an employed applicant receiving PAYE income, a company director often has a more flexible income structure. This can include salary, net profit, retained profits and other income generated through their limited company.
Because of these complex income structures, lenders assess applications differently to build a clear picture of your finances. Understanding how your income is presented can make it easier to get a mortgage and identify the right lender for your circumstances.
What Do Mortgage Lenders Look For?
When reviewing a company director mortgage application, lenders look at a variety of things. They’ll also consider your business performance, financial history and overall affordability before deciding whether to approve your application.
Although every lender has different criteria, they commonly review:
- Company accounts
- Bank statements
- Tax calculations
- Tax year overviews
- Credit history
- Trading history
- Existing financial commitments
Company Accounts and Trading History
Company accounts help lenders understand how your business has performed over time. Most lenders will review your year’s accounts and year’s trading history to assess the stability of your business, although some specialist lenders may consider applicants with more limited trading history.
Supporting documents such as bank statements, tax calculations and tax year overviews can also help provide a clearer financial picture and support your application.
Good Credit History and Affordability
Alongside your business finances, lenders assess your personal credit history to understand how you’ve managed borrowing in the past. Having a good credit history can strengthen your application, although previous credit issues don’t always prevent you from getting a mortgage.
Lenders may also consider your debt to income ratio and mortgage affordability when assessing whether your mortgage repayments are likely to remain affordable over the longer term.
How Is a Company Director’s Income Assessed?
The way a company director’s income is assessed will depend on the lender and your individual circumstances. While some lenders focus on salary and dividends, others may also consider net profit or retained company profits when reviewing your application.
This means your borrowing capacity can vary between lenders. Understanding how your income is assessed can help you prepare the right documents and choose a mortgage that’s suited to your financial circumstances.
Salary, Dividends and Net Profit
Many company directors choose to take a modest salary alongside dividends for tax purposes. Some lenders assess this withdrawn income, while certain specialist lenders may also consider company profits or retained profits when building a picture of your overall income.
Your company accounts, year’s accounts and business performance all help lenders understand whether your income is sustainable. This can be particularly important if you reinvest profits back into your limited company instead of withdrawing them each tax year.
Why Different Lenders Reach Different Decisions?
Not all lenders assess company directors in the same way. High street lenders, building societies and specialist lenders can all have different approaches to assessing income and affordability.
Because of this, choosing the right lender can make a significant difference to your borrowing power. A lender that understands limited company income and complex income structures may be able to offer mortgage products that better reflect your circumstances.
What Can Affect Your Borrowing Power?
Even if your business is performing well, several factors can influence how much you’re able to borrow. Lenders look at your overall financial position rather than focusing on one figure alone when assessing a company director mortgage.
Your borrowing capacity may be affected by:
- Deposit size
- Credit report
- Income stability
- Business finances
- Existing financial commitments
- Expected mortgage repayments
Deposit Requirements
Your deposit can have a significant impact on the mortgage products available to you. While deposit requirements vary between lenders, a larger deposit can improve your borrowing capacity, increase your maximum loan amount and help you access more competitive interest rates.
Alongside your deposit, lenders will also consider your credit report, income stability and business finances before deciding your maximum loan. Taking time to strengthen these areas before applying may improve your chances of securing a suitable mortgage deal.
How Can Company Directors Improve Their Mortgage Application?
Preparing your finances before applying can make the mortgage application process much smoother. While every lender has different eligibility criteria, being organised can help lenders assess your application more efficiently.
Before applying, it helps to have:
- Up-to-date company accounts
- Recent bank statements
- Tax calculations
- Tax year overviews
- Details of your income and business finances
Keep Your Financial Records Up to Date
Lenders require accurate financial information when assessing company directors. Keeping your company’s accounts, bank statements and supporting tax documents organised can help demonstrate the stability of your business and reduce delays during the application process.
Understand Your Business Finances
Knowing how your business is performing can help you prepare for questions about your income and affordability. Understanding your business finances, income structure and recent trading figures will also help you explain your financial position more clearly if needed.
Speak to a Specialist Mortgage Broker
A specialist mortgage broker understands the challenges that can come with company director mortgages. They can explain how different lenders assess income, recommend the right lender for your circumstances and help you prepare a stronger mortgage application before it’s submitted.
Why Use a Specialist Mortgage Broker?
Finding the right mortgage isn’t always straightforward for a company director. Because different lenders assess income in different ways, working with a specialist mortgage broker can help you understand your options and approach the application with confidence.
A mortgage broker can explain how your income is likely to be assessed, recommend mortgage products that suit your circumstances and guide you through each stage of the application. They can also help you compare different lenders, making it easier to find the right lender for your needs.
Specialist Lenders vs High Street Lenders
High street lenders, building societies and specialist lenders all have their own lending criteria. While some mainstream lenders focus on salary and dividends, others may take a broader view of limited company income and company profits.
Choosing the right mortgage provider can have a real impact on your borrowing capacity and the mortgage products available. A specialist mortgage broker can help you compare your options and identify lenders that are best suited to company directors.
Why Choose Jones & Young?
Finding the right company director mortgage is about more than comparing interest rates. Working with advisers who understand how company directors are assessed can make the process much simpler.
Here at Jones & Young, we help company directors, self employed applicants and business owners find mortgages for company directors that suit their circumstances. We’ll explain your options, recommend suitable lenders and support you throughout your mortgage application.
Whether you’re buying your first home, moving house or remortgaging, we’ll help you find the right mortgage for your needs. Get in touch today to see how we can help.
Company Director Mortgage FAQs
Here at Jones & Young, we’ve answered some common questions about mortgages for company directors, how lenders assess income and what to expect during the mortgage application process.
Can a company director get a mortgage with one year's accounts?
It may be possible. While most lenders prefer at least two years’ accounts or trading history, some specialist lenders may consider applications from limited company directors with one year’s accounts, depending on their circumstances.
The evidence required will vary between lenders, so speaking to a specialist mortgage broker can help you understand which options may be available.
Do all lenders assess company directors in the same way?
No. Different lenders assess company directors using different methods. Some focus on salary and dividends, while others may also consider net profit, retained profits or the overall performance of your business.
This is why mortgages for company directors can vary between lenders. Choosing the right lender can have a significant impact on your borrowing capacity and the mortgage products available.
Can retained profits improve my borrowing power?
In some cases, yes. Certain specialist lenders may consider retained profits when assessing affordability, particularly where profits have been left within the business rather than withdrawn.
Whether retained profits are included will depend on the lender’s criteria and your financial circumstances. Seeking mortgage advice can help you understand the options available.
What documents do mortgage lenders require?
Mortgage lenders usually ask for company accounts, bank statements, tax calculations and tax year overviews to help verify your income. They may also request additional documents depending on your business and income structure.
Having these records organised before applying can help make the process smoother and provide lenders with a clearer financial picture.
Why do many company directors take a lower salary?
Many limited company directors choose to take a lower salary alongside dividends for tax purposes. This can improve tax efficiency while allowing profits to remain within the business where appropriate.
Although this approach can be beneficial, it’s important to remember that lenders assess income differently. Speaking to a mortgage broker before applying can help you understand how your income is likely to be viewed.
