When qualifying for a mortgage, being a limited company director might provide some unique obstacles. However, securing a favorable bargain is not impossible. Here’s all you need to know about it.
Because each business is unique, high-street lenders may treat company directors differently. If you’ve been looking for a mortgage, you may have been offered drastically varied interest rates from different lenders, or you may have been outright turned down.
However, as a corporate director, getting a mortgage, a second mortgage, or even a buy-to-let property is a very feasible ambition. Most of the time, all you have to do is find the correct lender. If you are a director of a company and looking for a mortgage then you should visit www.mortgage-selfemployed.co.uk where you can get the best mortgage at a reasonable price.
Who Can Help You Find the Best Deal?
A Lender That Looks at Your Most Recent Year of Finances. Find a lender who will complete an affordability analysis based on your most recent tax year if you can. If your business is new or developing, this might help you secure a better mortgage rate. Lenders who need three years’ worth of statements will average them.
And if they’re considering earlier years or your startup year, you can be granted a lesser loan or a higher interest rate.
Finding a lender who would look at your past 12 months of accounts might make a huge difference if your earnings are increasing.
A Lender That Looks at Your Share of the Company’s Net Profit. Different lenders examine business directors’ affordability in different ways. One of the most important distinctions is whether they calculate your income based on your PAYE wage or your part of the company’s net profit.
Suppose your business is performing well, and the lender bases their calculations on earnings. In that case, you may discover that additional options open up for you, such as longer mortgage terms, smaller down payments, and cheaper interest rates.
How Much Can Company Directors Borrow?
So, how does this affect your mortgage? And what about the deposit you’ll need to put down on your new house?
If you locate the correct lender, there are a few 95 percent mortgages available for business directors (you’ll need to put down a 5% deposit).
A 90 percent or 85 percent mortgage is more typical (with a 10 percent or 15 percent deposit). Putting down a larger deposit can help you receive the best interest rate conditions.
The greater the loan you’re seeking, the larger the deposit you’ll have to put down. It’s all about the lender doing everything they can to reduce the chance of the firm failing.
Can You Get a Mortgage With a Poor Credit History?
Getting a mortgage with a bad credit history is difficult for anybody, including business directors. It ultimately relies on the severity of your credit issues. It shouldn’t make much difference if you missed a phone bill three years ago. A CCJ, on the other hand, severely restricts your mortgage possibilities.
Getting a mortgage might also be difficult if you’ve recorded corporate losses as a company director in the previous three years. Declared losses are a warning flag to lenders that you may have more troubles in the future. You should anticipate making a greater deposit or paying a considerably higher interest rate on your loan.
All of our credit-building advice still holds true because your personal funds are ultimately distinct from your corporate finances as a director.
Getting a buy-to-let mortgage through the firm is another option for company directors. This only applies to buy-to-let mortgages, and the procedure can be tedious. Still, it makes sense for some businesses, particularly SPVs (special purpose entities), that already trade in real estate.
Your resources are distinct from those of the limited firm that reduces your risk.
