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Mortgages for company directors

Company directors have an extremely important role in any company and also it can be extremely stressful at times.

There are many advantages to being a company director and lots of different levels of director, depending on the size and type of company. Getting a mortgage can be simple but also can be extremely complicated, depending on your circumstances.

We work with lots of company directors of all levels. We help make sure that they get the best mortgage deals, and save them precious time.

Company director statistics UK

Here are some facts and statistics about company directors in the UK that you may not know.

  • Average age of new directors: 40 years of age
  • How many directors can a company have: One or more (no upper limit)
  • Average age of non-executive directors: 60.3 years of age
  • Average director salary: £93,451 per year
  • Minimum age for company director: 16 years of age

There are also approximately 3.5 million sole proprietorships in 2019, then around 414,000 partnerships, and 2 million limited companies.

About mortgages for company directors

As a company director, you will have a number of potential challenges when applying for a new mortgage or a remortgage.

Some of the key areas that we would need to consider include:

  • Employment type (e.g. employed or self-employed)
  • Length of employment
  • Type of income (e.g. Salary or dividend)
  • Credit history
  • Deposit or Loan to Value (LTV)

There are various levels and types of company directors and it’s important to understand your circumstances. As an expert in helping to find mortgages for company directors, we know which lenders are best for each situation.

Legally there are two types of company director which are either Executive Directors or Non-executive Directors. The only practical difference is that a non-executive director does not have any involvement with running the business day to day.

Some of the main director roles:

  • Limited company director
  • Managing director
  • Sales director
  • Finance director
  • Operations director
  • Marketing director
  • HR director

A director will also usually have some shareholding or ownership within the company, depending on their level and experience.

Mortgage lenders will be interested in which type of company director you are, any shareholding in the company, and how you are paid. This means that you will need to provide differing evidence of income depending on whether you are classed as employed or self-employed.

Mortgages for limited company directors

One of the most common circumstances that we see is where we help to find mortgages for limited company directors.

The vast majority of directors that we deal with are managing directors or similar, in Small and Medium-sized Enterprise (SME’s) limited company. This can have a number of ramifications when applying for a mortgage, especially from an income perspective.

A limited company director can be either an owner or an employee depending on their level, which is one of the main challenges.

Some of the main income areas to consider with mortgages for limited company directors:

  • Salary (PAYE) – often limited company directors will pay themselves a smaller salary or a directors fee, to reduce income tax liability. This is a standard situation and is nothing that would cause too many issues from a mortgage affordability perspective
  • Dividend – most limited company directors will have an element of dividend income as part of their remuneration. This is usually for tax efficiency purposes and certainly not an issue for mortgages for limited company directors
  • Trading history – if you are a company owner or shareholder then your mortgage application will usually look at your business trading history. Some lenders will want to see a minimum number of years of trading history (e.g. 2 or 3 years)
  • Accounts or accountant reference – as a limited company director you will have an accountant and company accounts. Your limited company director mortgage application will usually include either evidence of accounts and/or an accountants reference
  • SA302’s – an SA302 is a summary of your income that is reported to the HMRC every year. Most mortgage lenders will use this document as evidence of earnings for a limited company director that is classed as self employed.

There are several key elements to income when applying for mortgages for limited company directors that can impact your mortgage rates.

If you are a director that is self employed, we can help you find great deals on self employed mortgages.

Check out our guide for more information on how to evidence your income using an SA302.

Mortgage for company directors on PAYE

It is also common for certain levels of company directors to be paid via Pay As You Earn (PAYE) which is a normal salary.

Often these types of directors will be employees, such as:

  • Sales directors
  • Finance directors
  • Marketing directors
  • Operations directors

If you are employed by a company as a director and your income is purely PAYE then you should have no real income issues when applying for a mortgage.

Most mortgage lenders for company directors on PAYE will require standard evidence of income, such as:

  • 3 months payslips
  • Latest P60
  • Bank statements

You may have other income outside of your employment such as rental income or other employed or self-employed income. This may also be taken in to account when you apply for a mortgage as a company director. Lenders will need to know your overall net profits from any businesses you are involved with.

Best mortgage lenders for company directors

There are around 100 mortgage lenders in the UK and literally thousands of mortgage deals to choose from.

It can be extremely confusing when looking for a mortgage lender, especially if you have complex income or bad credit. In most cases you’ll be able to get a mortgage from a high street bank or building society. It can however be difficult to find the best rates.

Our best mortgage lenders for company directors include:

  • Accord Mortgages
  • Barclays
  • Halifax
  • HSBC
  • Natwest
  • Newcastle Building Society
  • Santander
  • And more…

The best lenders and deals for you will vary depending on your individual circumstances and several key areas, including:

  • Type of mortgage
  • Mortgage deal
  • Credit history
  • Income and income structure
  • Loan to Value (LTV)

Our team of qualified mortgage experts will take the hassle and pain out of trying to find the best deals for you.

Mortgages for company directors with bad credit

We often help people with bad credit and this is especially relevant for people who are self-employed, including company directors.

 You might have also applied for a mortgage previously and struggled. This could be due to a low credit score or other elements of your credit history. If you’ve been refused before don’t worry. There are often other options or lenders that you might not have considered.

Some of the most common types of bad credit mortgages for directors that we work with:

To get the very best mortgage rates and deals with any type of bad credit, you should consider speaking to an expert or specialist. We have several great lenders on our hand picked dedicated panel who can offer mortgages with excellent rates – even with a poor credit history.

Learn more information about poor credit mortgages.

Mortgage advice for company directors

Getting quality mortgage advice from a qualified mortgage specialist will give you the best chance of securing the right deal.

An experienced mortgage advisor should have a good knowledge of dealing with mortgages for various job roles and a selection of lenders. This means that you’ll have a greater chance of success and that you should save money by getting the best rates.

It is important to make sure that your mortgage advisor has the relevant expertise in dealing with mortgages for company directors.

A mortgage advisor for company directors will understand about:

  • Directors income
  • Self-employed individuals
  • Bad credit
  • Complex incomes

Our team of fully qualified mortgage experts has years of experience in dealing with customers like you.

Mortgage specialists for company directors

With a demanding job role, we appreciate that your time is limited and how important customer service will be.

There are also many potential challenges to applying for a mortgage as a company director which is one of our areas of expertise. We know how disappointing and frustrating it can be to get bad advice and poor service.

You will need someone that understands exactly what you need and how mortgages work for all types of company directors. With access to specialist lenders, we can help you find a great deal no matter your occupation or circumstances.

essential MORTGAGES is authorised and regulated by the Financial Conduct Authority and we are experts in all mortgage products and types. This includes mortgages such as buy to let mortgages and first time buyer mortgages, as well as different types of interest rates including fixed rate, variable rate etc.

Useful resources – Being a company director – Starting a company: detailed information

Citizen’s Advice – Buying a home – Working for yourself – How to buy a home

Essential Mortgages is a leading mortgage expert